The financial wellbeing of Gen Z Kiwis at a crossroads

The Financial Services Council (FSC)’s latest research paints a picture of the financial wellbeing of New Zealand’s newest adults at a crossroads.

The report, ‘Money & You: The Financial Lives of Young New Zealanders’, centres on the financial situations of 18 - 25 year old “Gen Z” Kiwis. This cohort is highly engaged with KiwiSaver, with 96 per cent being enrolled and 80 per cent having checked their KiwiSaver fund in the last year, placing them in the best position to benefit from KiwiSaver and to take steps to protect their future.

“This upcoming generation is deeply invested in KiwiSaver. They have time on their side and the opportunity to contribute early. Coupled with the Government announcement in Budget 2025 to lift the contribution rate to 4 per cent in 2028, if they go beyond the default contribution the long-term benefits could be substantial.”

“The Government has a real opportunity to build on strong public engagement with KiwiSaver by launching a national strategy. A long-term KiwiSaver strategy would not only secure better retirement outcomes for New Zealanders, it would unlock billions in capital that could be invested back into New Zealand through infrastructure, housing, and innovation” says FSC CEO Kirk Hope.

The research also identifies that Gen Z are savers, with 62 per cent saying they would save their money if they had extra funds or a pay rise.

However, despite these positive aspects of this cohort’s financial behaviours, they are deeply uncertain about making financial decisions and anxious about the state of the world.

“This generation’s confidence in financial decision-making has declined from 42 per cent in 2023 to 35 per cent, with only 13 per cent saying they are extremely confident in financial decision-making,” says Mr. Hope.

“As this generation navigates economic situations for the first time, like many New Zealanders in the current economic climate, 93 per cent are concerned by cost of living and 58 per cent would rely on friends and family if unemployed,” adds Mr. Hope.

“Learning about financial resilience and building confidence in financial decision-making can be addressed by encouraging young adults to reach out to professional financial advice and having financial literacy taught to them whilst at school,” says Mr. Hope.

“Similarly, this cohort lacks confidence in decision making involving insurance, with only 33 per cent being somewhat or very confident to do so. The research shows that 37 per cent of this cohort have health insurance, while a little under a quarter have life insurance. The FSC’s ongoing call to remove Fringe Benefit Tax (FBT) on employer-provided health and life insurance would open the door for more working Kiwis to gain protection through workplace benefits.”

Other key findings from Money & You: The Financial Lives of Young New Zealanders include:

• 40 per cent of 18 – 25 year olds contribute the default KiwiSaver contribution of 3 per cent, with 50 per cent of the cohort having balances between $1,000 - $10,000. 3 per cent report balances over $50,000.

• 74 per cent have not applied or considered applying for a KiwiSaver hardship withdrawal, with first home buyer withdrawals the largest withdrawal reason.
• 69 per cent of the cohort would consider professional financial advice, in contrast to the 18 per cent who are currently receiving advice or have received advice in the past.

The FSC will continue engaging with Ministers and policy makers to drive opportunity around KiwiSaver, improve access to insurance and grow the financial wellbeing of New Zealanders and future generations.

The full report is available here.

ENDS