Inside Money: Retirement - approximately the uncomfortable truth

How much money will you need to be living well in your retirement? Photo / Thinkstock

New research from the soon-to-be-rebranded Investment Savings and Insurance Association (ISI) has found that over one-third of New Zealanders believe they have saved enough to cover retirement costs.

This is an encouraging result. It's certainly a much higher proportion than I would've said in reply to a random survey asking me what percentage of New Zealanders do I think believe they are saving enough for retirement.

For some reason the ISI has chosen to focus on the negative, the 63 per cent of New Zealanders who don't think their current savings habits will fund a comfortable retirement.

"There is widespread concern among New Zealanders over how much income they will have in retirement," the ISI press release states.

This survey is mainly about perception rather than reality. It's quite possible that most of the survey respondents were reporting a vague dread of a miserable, underfunded retirement than a clear, quantitative assessment of their financial prospects.

How much is enough? What is comfortable? The ISI provides little guidance here, and, to be fair, it is an individual issue. There are plenty of online calculators designed to help you crunch the retirement numbers, such as those on the Sorted website.

Elsewhere, other financial industry lobby groups do attempt to define retirement comfort zones. The Association of Superannuation Funds of Australia (ASFA), for example, produces a quarterly 'Retirement Standard' report, breaking down life costs for those who expect modesty or comfort in retirement.

The one more substantive result from the ISI survey (at least from what's been released so far) does, however, point to a real savings issue.

According to the ISI survey, "61.5 per cent of current retirees say that their income is not as much as they expected before retirement". Did they use the wrong calculator? More likely, their calculations were based on assumptions of higher interest rates and finance companies not falling over.

From next week, the ISI takes on its new identity as the Financial Services Council, a name that hints at greater trans-Tasman co-operation with its Australian counterpart which adopted that same name in 2010 after a survey found it sounded better.