KiwiSaver members should contribute at least 10pc of income

How much do you weigh?

Such personal questions can feel a little uncomfortable. Let's go further.

What quantity are you putting away each week? That might get your hackles up, but this isn't a health survey. 

The questions are about money. A topic that's just as uncomfortable and squirmish.

Our KiwiSaver accounts weigh too little and retirees are reaching the gates of freedom looking malnourished. Human chubbiness is rife, but we are not a nation of financial fatties - unfortunately. Adding to that, anyone currently below the age of 55 should plan on a new superannuation age of 67.

Despite the problem, there is no clear message from the financial industry on how much we should be saving. We skirt around the edges with soft education. Look at fees, look at your fund choice, but by golly we couldn't possibly get loud and make a clear industry statement that responsible adults save a minimum of 10 per cent of income.

It reeks of "fat content" and the "food pyramid". They are incredibly important factors, but neither gets a number one ranking in my book.

The single biggest factor in success is quantity. With both food and finance the volume issue gets ignored. "Eat less, it works" isn't going to make a government health policy initiative. Just like "Save more, it works" feels a bit obvious.

Like food producers, it seems fund managers are to blame for our Body Mass Index – they must have stripped out too many fees and managed the money badly. Quite honestly some do, so let's not deny that. Yet quite a few are doing a good job and they're not difficult to find on the shelves. 

The largest determinant of our under-weight portfolio is looking at us in the mirror. Yes you, skinny chops.

What percentage of your income are you putting into KiwiSaver? It's an uncomfortable question again. Are you saving 10 per cent? If not you'll be stretched in retirement. Up go the cries of horror. Housing affordability is dire, people have children, lose jobs, marriages breakdown, and health issues arise. 

Just like diet and exercise, life throws its curveballs. For many, these issues are too big to overcome, which is why KiwiSaver contribution levels are set low.

For New Zealanders on medium to higher incomes, 10 per cent into KiwiSaver is the bare minimum. The only excuse is if you didn't know you were supposed to. That's the fault of the financial industry for not shouting louder than the Government.

The government set contribution levels at 3 per cent with an additional 3 per cent from employers. That gets you to 6 per cent. Actuarial boffins did not select these low levels. They were pulled out of thin air to ensure everyone can save a little. Use it as a guide at your peril.

There are also options of 4 and 8 per cent, which give 7 and 11 per cent when employer contributions are added. This is not a maximum. Savers should view the largest number as a government suggestion that barely exceeds a realistic minimum. Ticking a box at the top end of a list can give a false sense of security.

The most important factor in retirement planning is working out what "income replacement rate" you can live with. No mortgage, lower taxes and not saving means you can live on less. How much less? An estimated fund value won't enlighten you, but an income replacement rate hits home.

Researcher Massi de Santis from Dimensional Fund Advisors explains how the 10 percent savings rule can give different outcomes.

Adult 1 earns a flat income of $100,000 a year for 40 years, saving 10 per cent. With an investment return of 4.5 per cent their portfolio value is $1.13 million. Dimensional estimate this will give a replacement rate of 51 per cent of income ($51,000). The outcome is only healthy due to high earnings in early years, which is unrealistic.

Adult 2 earns $20,000 a year, rising to $180,000 over a 40-year career and also saves 10 per cent of income. With a 4.5 per cent investment return, the portfolio value is $864,000. This gives replacement income of 22 per cent of final salary ($40,000). While these earnings are beyond most people, it's designed to show that even high earners face a massive change in lifestyle when saving 10 per cent of income.

The financial industry must get louder about a minimum 10 per cent savings rate, alongside fee and fund education. But where financial health is concerned, personal responsibility comes first and it's all about quantity.

Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.