How much will I need to retire?
Everyone’s retirement needs are different. To work this out, think about how long you might have in retirement, what sort of lifestyle you will want, and where you will live. Our retirement calculator offers some figures based on what retirees are currently spending.
How many years should we plan for?
There is no set ‘retirement age’ in New Zealand. NZ Super is paid from age 65, but you don’t have to stop working to get it. More and more people are working beyond 65 either full time or part time.
We’re living longer these days. On average, 80% of 65-year-old men can now expect to live until they're 90, and 65-year-old women until they're 94.
In the future, we'll probably live even longer. These figures are based on the latest Statistics New Zealand cohort life tables. Here’s where to estimate your life expectancy.
Let’s say you plan to retire at 65. You would need to save and invest, or have another plan, to provide the income you want for 25–30 years or more, and make sure your money lasts as long as you do.
What sort of retirement lifestyle do we want?
What will your cost of living be in retirement? Some costs may go up (like healthcare) while others (such as education, clothing, housing, work-related travel) may go down. If you have children, they will probably be financially independent.
Our retirement calculator includes figures for more of a ‘no frills’ lifestyle, or one with a few more ‘choices’, based on what retirees are spending these days. The first is pretty basic; the second is more comfortable with some luxuries and treats.
You also need to think about what your goals might be in retirement – travelling to new places? Joining clubs, going out to dinner and shows? Much of this depends on what’s on your ‘bucket list’.
Will we rent, still have a mortgage, own our home outright?
If you rent, you’ll need more savings to cover the cost – but on the other hand, you won’t have money tied up in a home. If you end up retiring with a mortgage, there will be that to plan for as well.
Owning the place you live in debt-free reduces the risk of rent increases or being asked to find a new place to live. You'll have more control over your finances, but you will have to take care of maintenance, insurance and rates.
Being mortgage-free by retirement is a great goal to aim for. The reason many people currently in retirement are able to manage financially is because they no longer have the burden of mortgage repayments.
Where will my retirement money come from?
Seeing that we could be retired for 30 years, we’re going to need money coming in. From the age of 65 most New Zealand residents receive NZ Super every fortnight. Additional retirement income above that needs to come from savings, paid work or business activity, or even our home.
Most retired New Zealanders get their income from two main sources – NZ Super and their own savings. However, close to 40% of New Zealanders over the age of 65 rely on NZ Super alone.
Take a look at the current rates of NZ Super. Would that be enough to live on?
Most likely, there will be a gap between the income NZ Super provides, and the income we want in retirement. So we’ll need to have other sources when planning for retirement needs.
You can use our retirement calculator to work out how much to save.