New Zealanders still expect their family home will help fund their retirement needs, according to survey conducted by AMP.
The AMP Superwatch survey of 470 New Zealanders aged over 18 found more than half of them plan to sell the family home when they retire with two thirds of them expecting to make a profit.
Head of AMP Financial Services, John Drabble, says the survey confirmed the long held belief that New Zealanders cling to the “misguided notion” that the family home will fund retirement goals.
“The problem is that with so many New Zealanders having the same idea and aiming to sell their house at roughly the same time, supply will outstretch demand, and rather than making a profit people may find themselves suffering a loss when they can least afford it,” Drabble says.
He says people are also unlikely to profit from selling the family home as retirees generally seek modern, low maintenance homes that often cost the same as the price they receive from the sale of their own house.
“People shouldn’t gamble solely on making a profit from their house sale to fund their retirement years, they need to consider and invest in other forms of saving if they want certainty.”
However, Drabble says there are some positive signs from the survey. Almost half of those surveyed say they are saving for retirement above what they expect from the government pension.
“But of those earning under $NZ50,000 per annum, only 33 per cent are currently saving for retirement, which raises the question of whether the right incentives currently exist to encourage the majority to save,” Drabble says.
“Higher income earners – over $NZ60,000 – recently received a small tax incentive for retirement savings by keeping the tax rate on employer super contributions at 33 per cent compared with their marginal rate of 39 per cent. We believe there is scope to extend this incentive to lower income earners.”
Drabble says other proposed savings incentives – such as the mooted shift from a TTE regime to a TET system – would benefit the country.
“Even if these incentives failed to lead people to save more they should at least help them save through a more appropriate medium,” he says.
“If it encouraged a move from defensive to growth assets that would be
fantastic.”
More results from the AMP Superwatch survey are due to be released in
a month.
