Most young people expect New Zealand Superannuation will be means-tested and the age of entitlement lifted by the time they retire - and fewer than a quarter think it will be enough to live off.

The findings are the latest update from a longitudinal study being undertaken by Massey University's Fin-Ed centre.

The study began in 2012 with a sample group of about 300 people aged between 18 and 22 and will follow their financial situation for a 20-year period.

In April a survey put to the group asking them about planning for their retirement found 84 per cent expect the age of eligibility for NZ Super to increase and 73 per cent expect means testing to be introduced.


Currently the pension is paid at 65 and is not means tested. Only 23 per cent believe NZ Super will be sufficient in retirement.

Claire Matthews, co-author of the report, said it appeared young people were being realistic about the future of New Zealand Superannuation.

"There has been a lot of talk about the age of eligibility needing to go up."

While Prime Minister John Key has said that won't happen under his watch Matthews said young people recognised there was still a lot of time before they retired.

"In their case it is 40 additional years plus before they are going to get to that point and in that time there is likely to be changes," she said.

"The truth is it's not sustainable for NZ Super to be available at 65. The Government needs to move sooner rather than later because the longer they leave it, the harder it is going to be," she said.

"With enough time, the age of eligibility can be raised gradually, which lessens the impact on everyone."

Matthews said the survey provided evidence that younger New Zealanders accept that they will not retire with the same level of government support as today's retirees.


"The people who are most opposed to the age of eligibility increasing are those currently retired or close to retirement," she said.

"Yet younger people, who will be the most affected, are already getting the message that receiving New Zealand Superannuation at age 65 is reasonably unlikely."

The research also showed young people were acting on their concerns, with 90 per cent signed up to KiwiSaver and two-thirds contributing more than the minimum 3 per cent to their retirement savings.

But that action may not be enough for all, with just 49 per cent of participants expected to meet their retirement goal based on their current level of income and savings rate.

The shortfall was up to $500,000 for some.

The research also revealed that young people were overly optimistic about owning a debt-free home at retirement - a key plank in getting to retirement in a good position.


The current rate of home ownership is 64.8 per cent but 86 per cent of participants believed they would have a freehold home by retirement.

Matthews said she hoped home ownership would not drop further and said getting New Zealand's rampant housing market under control would be key to maintaining that.

Higher contribution rates to KiwiSaver could help young people get a foot on the property ladder, as well as other decisions such as choosing to live outside of Auckland.