KiwiSaver: Are you on track?

Under 35 with more than $9k in your account? You are doing better than the average.

If you are under 35 and have more than $9k in your KiwiSaver account you are doing better than the average millennial - but experts say savers should focus on whether you are on track for the kind of retirement you want.

Data sourced by the New Zealand Herald from the six largest KiwiSaver providers show average balances vary widely between the generations and a gender gap has already emerged after the first 10 years.

Millennial KiwiSaver members - those aged 18 to 34 have the lowest average balances at $8,542 - compared to the baby boomer generation (51-69) who are averaging over $25,000.

David Boyle, group manager investor education for the Commission for Financial Capability, said while millennials had the lowest balances they were in a great position because they had begun saving.

Boyle said if that generation were able to keep saving over their life-time they would be able to put aside a significant amount of money.

He urged millennials to project their saving rate forward over 30 years to see if they were on track for the kind of retirement they wanted.

Boyle said those in generation X would be on potentially higher incomes but would likely be concentrating on trying to get mortgage debt down.

He said those below the average probably needed to do some more work on their savings and around how much they wanted to live off in retirement.

Those in the older end of gen-X may have paid off their mortgage and be able to divert some of their savings towards retirement and should start talk with their provider about a plan to work out where they would be in 15 years time.

While the baby boomers probably had less debt and were able to ramp up savings now they were getting to the "sharp end of the stick".

Boyle said balances still seemed pretty low for the baby boomer generation even after 10 years of saving.

Based on the spending of today's retirees many would fall short of having a comfortable retirement.

Using data from the latest Massey University Retirement Expenditure Survey shows a single person who retires at 65 and lives to age 94 would need a lump sum of $108k to live a no frills life in a metropolitan area of New Zealand or just over $30k to live provincially.

Those who want more choices - the ability to have steak for dinner, use heating in winter or go on an overseas holiday would potentially need $397k in a metropolitan area or $427k in the provinces.

Boyle said KiwiSaver members should not use the averages as a benchmark for themselves.

"You need to personalise it and take into consideration what is important to you."

Deborah Carlyon, a financial adviser at Stuart Carlyon, also urged savers to consider how much they would personally need in retirement.

"My message is not really whether a KiwiSaver investor is doing better or worse than the average balance but rather how they are doing in respect of their own retirement income needs. That requires analysis which is empowering if done personally."

Carlyon said some providers had calculators on their website which enabled people to work this out while the government's Sorted website also had a retirement planner which allowed people to work out how much of a lump sum they would need based on how much they planned to live off.

Carlyon said spending in retirement could be worked out based on today's spending as it was too difficult to work out how much costs would increase by the time a person retired.

"The key is to first visualise how much you will need to spend when you retire.

"Think in today's money and take out lifestyle costs you are unlikely to have when you retire - mortgage payments, costs for children, life insurance, work costs (commuting, clothes)."

Carlyon said the calculator could help people see whether they were on track or need to save more.

"If you can't, then you do have choices - adjust your current spending or your retirement spending goal, or plan to release money from your house by relocating to a cheaper city during retirement."

Those who were currently renting could factor that in to their retirement saving if they did not want to buy a house or could not afford to.

"If renting, then clearly more savings are required to cover rent during retirement."

She said it should be possible to save more while renting as rental costs were lower than repaying a 30 year mortgage and paying home ownership costs.