YOUR MONEY: Save now to retire in comfort

By Julia Holmes
"Pretty horrific."
That is how Tauranga pensioner Owen Aagaard describes life on government superannuation.
"We have to starve, look after ourselves, cut down," the 75-year-old says.
His warning to others is this - start saving now so you don't end up in the same situation.
"It doesn't matter what you put aside it builds up. As long as you set a figure and keep on putting money aside. The interest lifts it up little by little."
Mr Aagaard, who lives in a one-bedroom council flat, did not put any funds aside for his retirement because he says he simply couldn't afford it.
A baker by trade, he worked in several different jobs until he reached 60, retirement age then.
Having married in his mid-50s and taken on his wife's seven dependent children, he went into the restaurant trade to support the family but sold the business and their house four years later when the relationship ended.
The small surplus that was left went to his ex-wife.
With no savings he now has to make do on an income of $575.32 a fortnight, which barely covers his living expenses.
He recently treated himself to a two-week holiday round the South Island with his 96-year-old neighbour Kenneth Thimbleby but had to borrow $1000 to fund it.
"I'll be doing it hard but I'll survive," he says of meeting the repayments.
To keep his living costs as low as possible he hardly ever uses heating, buys groceries jointly with Mr Thimbleby and eats "sensible foods".
Church groups and friends also help out.
"I haven't had a sirloin steak for years because I can't afford it. We've got to go for cheaper things," he says.
"We went crazy down south and bought a feed of whitebait. It cost us $49 each," he says of rare moment of extravagance.
While Mr Aagaard believes it should be compulsory for people to save for their retirement, he would also like to see government superannuation increased.
"We get 65 per cent of the average wage and that's not very much, believe you me. I get very stinky about it because the Government has depended on the oldies not complaining. If all the older people that helped people stopped, this country would come to a halt."
Financial advisers say the predicament that Mr Aagaard is in is all too common in the Western Bay, where about 16 per cent of the population is aged 65 and over.
"With the demographics in the Bay of Plenty, a large number of people are already retired and many have left it too late to save for the future or underestimated the importance of making provisions for their retirement," says Chaye Pettigrew, of Forsyth Barr in Tauranga.
"There appears to be a new approach to life. The younger generation has more to contend with, juggling student loans, the lure of overseas travel and higher entry prices for homes."
Most people fall into one of four groups, he adds, the majority of whom are under the misconception that the family home forms a major part of their retirement fund and they rely on the government for assistance.
Others either attempt to put money aside but are not making informed choices and lack discipline and structure, while a smaller number of savers follow a plan under the guidance of a professional.
The final group is those that don't save at all.
It is important that people diversify their investments and reduce their reliance on the family home and state support, he advises.
Ron Lander, of New Zealand Financial Planning, says there has been a greater awareness in recent years of the need to save or invest for retirement but statistics indicate that most people are still not doing enough.
According to the annual Sovereign SaverPulse survey only 50 per cent of New Zealanders are saving for retirement. "Most New Zealanders spend on lifestyle assets without making sufficient provision for retirement which can result in a fall in lifestyle when they stop working," Mr Lander says.
More people are seeking financial advice, especially those aged 50-plus who realise they don't have many years left in the work place, he adds.
"People are living longer and have greater lifestyle expectations in retirement than previous generations but they need to plan if they are to have the financial freedom they desire."
Reserve Bank Governor Alan Bollard this month warned about unsustainable levels of borrowing and spending, pointing out that Kiwis dis-save about 12 per cent of their income and have the worst savings record in the OECD.
However Retirement Commissioner Diana Crossan says OECD data "paints a different picture", measuring different, more aggregate savings.
The New Zealand 2001 Household Saving Survey showed we are doing reasonably well at the average household level and the AXA Retirement Scope study of 9000 people in 15 countries also demonstrates that New Zealanders are not doing too badly in terms of savings, she says.
"While the material shows that there is not a massive under-saving for retirement in New Zealand, we know there are plenty of people out there who aren't saving enough and who need more tailored information to help them on their way."
In April 2007, the Government plans to introduce KiwiSaver, a voluntary, work-based savings scheme administered by Inland Revenue, to help savers.
Employees will be automatically enrolled into KiwiSaver when they start a new job. They will have three weeks to "opt-out" and must advise Inland Revenue of their decision.
The State Sector Retirement Savings Scheme (SSRSS), a voluntary savings scheme specially designed for the State sector, was introduced last year.
For most eligible employees, it means their employer makes contributions in addition to their own.