While Kiwisaver was conceived as a retirement savings scheme, for millennials it’s mainly a first-home savings scheme, new research shows.
In a survey of more than 1000 KiwiSaver members from different schemes, 74% of those aged 18 to 24 said their main reason for belonging was to save for a first home deposit.
For under-35s, 62% said they were in KiwiSaver to save for a first home.
Westpac NZ General Manager of Consumer Bank and Wealth, Simon Power, said the survey showed KiwiSaver now had a dual focus for many people.
“This reinforces how integral KiwiSaver has become for many New Zealanders. Many young people will use it once to help accumulate a deposit for first home, and then use it again to start rebuilding their nest egg for retirement.
“Owning a home is very positive to financial security, but the key is to maintain KiwiSaver contributions after purchasing their home so that their retirement savings don’t fall behind. It can be tempting to leave it for a year or two which can easily become longer. It’s important they start saving again quickly.”
The survey, carried out on behalf of Westpac by Nexus Planning and Research, also revealed millennials were more likely to have money in a Defensive or Conservative fund than Gen Xers.
Twenty-eight per cent of 18-34s indicated they had money in one of these funds, compared to 20% of 35-54s.
“There may be good reasons for some young people, like first home buyers, to be in a low risk fund but others may be better suited to a different product,” Mr Power said.
“Depending on their appetite for risk and how soon they’ll need to make a withdrawal from their KiwiSaver account, some of those people might want to review whether the type of fund they’re in has the right balance of risk and potential return to give them the kind of retirement they are seeking.