Kiwis continue to be the transtasman poor cousins come retirement. While Australians' retirement savings are building into substantial sums, Kiwis are either dithering over whether to join KiwiSaver or simply not saving enough.
At current rates, many Kiwis will have just a few thousand dollars a year over their New Zealand superannuation, which won't fund the lifestyle many are anticipating.
Changes to KiwiSaver in the May Budget, with employers contributing more, are likely to see KiwiSaver pots increase. Even so, financial advisers say it may not be enough.
Research by the Retirement Commission found once owner-occupied property was excluded, people were saving on average 5 per cent of their gross income. Australians are estimated to have on average more than A$56,000 ($72,000) of superannuation funds, whereas New Zealanders have about $5500 each in KiwiSaver.
Australian employers pay 9 per cent of employees' wages into super funds.
"Most [Kiwi] people cross their fingers and hope by the time they get to retirement it is enough," says financial educator Lisa Dudson.
Many new clients that Dudson sees have no idea how much their investments will translate to yearly income.
Individuals have many different ideas about the standard of living they require when they retire. One figure often cited is 70 per cent of a person's pre-retirement income - although Dudson leans towards 100 per cent because people often replace child and mortgage costs with hobbies and travel.
But a couple earning $80,000 before retirement would need 70 per cent of that ($56,000) to live once they've clocked off for the last time, say many financial planners. A married couple currently gets $30,584 before tax from NZ super, which leaves a shortfall of $25,416 annually.
To earn that figure, says Dudson, the couple would need about $500,000. Many people in KiwiSaver are saving the minimum and have no other retirement savings. "They don't work out KiwiSaver will be 'this amount when I get to this age'," says Dudson.
When some get their hands on that money they will inevitably blow it, Lotto-style, leaving them dependent on NZ super anyway.
Too many people include their lifestyle assets such as the house, boat, car and bach in their calculations, leading themselves astray.
"Whenever Kiwis get some money, they upgrade their houses," says Dudson. "Whenever do they downgrade? If you have a nice $1.5 million house in Remuera where your family grew up, are you going to move to a two-bedroom unit in Otara or even a unit in Remuera?"
KiwiSaver calculations are difficult because there are many variables, which include tax and salary rates, future investment growth and fund manager charges. One of the bigger factors is the type of fund people choose. Conservative funds are expected to grow slowest, balanced next, followed by growth and aggressive.
Even if Kiwis have planned for retirement, they may be basing their calculations on what money might buy today.
For example, $10,000 a year to spend for 20 years over and above NZ super may sound good today. If you're 45 years old now and retire in 20 years' time, that $10,000 may only buy $6000 worth of goods and $3600 by the time you're 80.
HOW MUCH CAN YOU EXPECT TO HAVE?
What can Suzanne and Jonathan, potentially a typical Kiwi couple, expect to save from their minimum KiwiSaver contributions - using the new figures from the May Budget?
Suzanne, 32, is a computer helpdesk operator, earning $50,000 and can expect annual pay increases of, on average, 3.5 per cent. She is in a conservative fund.
Suzanne invests 3 per cent of her salary a year, to which is added her employer contribution and member tax credit. Suzanne can expect annual growth averaging 2.5 per cent, pays 17.5 per cent PIE tax and, when inflation of 2.5 per cent is factored in, she would retire with a lump sum of about $115,000 in today's money. If she invested in a growth fund, earning 3.75, she would have $131,000.
To get anywhere near 70 per cent of her salary, she would need to be investing the 8 per cent maximum in KiwiSaver and investing at least another 2 per cent of her gross income elsewhere - other than in her own home.
Jonathan, 45, an environmental engineer, is earning $80,000 a year with expected annual pay rises of 3.5 per cent.
He has just joined KiwiSaver and is currently in a balanced fund. Jonathan also contributes the 3 per cent minimum matched by his employer and pays 28 per cent PIE tax on his KiwiSaver.
At these levels of saving he would retire with a post-inflation lump sum of $96,000 in today's money if he was in a balanced fund, or about $100,000 in a growth fund.
The latter would give him a little under $5000 per year to boost his NZ super payments.