Retirement planning - Saving for retirement

Looking forward to your retirement 

Ask anyone who's retired, and they will say to start saving for retirement as soon as you can!  

Even if it seems a long way off, it pays to start planning for retirement as early as possible. How much we need to save will depend on our own circumstances, but the sooner we start, the better the position we’ll be in when we eventually stop working.  

While NZ Super (the government pension) can help us get by, it's our own savings and investments that will help to make retirement fun andmore comfortable and enjoyable.  

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. 

Your money may come from...


NZ Super

New Zealand Superannuation is the pension paid by the government to most New Zealand residents from age 65. 

Any eligible New Zealander receives NZ Super regardless of how much they earn through paid work, savings and investments, what other assets they own, or how much taxes they have paid. Here’s this year’s NZ Super rates.  


Savings and investments

Many retired New Zealanders rely on income from their savings in addition to their NZ Super. This means investing money so that it generates income through interest or dividend payments.  

You may also plan to spend some or all of the money you have saved to help fund your retirement years. Here’s our guide to managing your retirement savings

The more dependent you are on savings, the more careful or 'defensive' your investment approach should be.


The extra benefits KiwiSaver offers make it a great option for retirement saving. 

As well as the money you put in, there are the annual contributions that KiwiSaver members receive from the government. Employees get contributions from their employer. All that money is then invested by a KiwiSaver provider and grows from earning returns.  

This extra money means your own savings will produce higher returns than another option where you are the only one who contributes. That will make it easier to reach your retirement savings goal.  

Here’s why KiwiSaver is worth it, and you can estimate your future results with  our KiwiSaver calculator.


Iwi-based savings schemes

Iwi-based schemes, such as Ngai Tahu’s Whai Rawa, can provide a meaningful part of retirees’ savings and income.  


Working in retirement

While some of us may end up stepping back from work for health reasons, some may keep working – either because we enjoy our work or need the money. Around a third of Kiwis continue some form of paid work past age 65. You may continue working as you are or do so in a different way – such as with flexible hours, part-time or casual work, consultancy or mentoring. 

Income from paid work will not affect your entitlement to NZ Super. However, it may affect your eligibility for income-tested benefits such as the Accommodation Supplement or the Disability Allowance. Senior Services has more information on 0800 552 002. 



The most common type of equity release is selling a house and purchasing a cheaper one that is smaller or in a cheaper area. This can free up some money while still providing the benefits of owning a home. 

Some retirees and future retirees plan on downsizing and moving to the regions, but this doesn’t always work entirely as well as intended. There are trade-offs to make in terms of your social network and access to services, which may mean living closer to a main centre remains preferable. 


Reverse mortgages

If you own a house or other property and need to free up some money for long-term living expenses, pay for emergencies or a major expense, you can use a ‘reverse mortgage’.  

This is where you borrow an amount against your property either in a lump sum or by drawing down on the loan as and when you need the money. In the meantime, the interest payments build up.  

When you die or the property is sold, the full loan plus interest must be repaid – so you will leave behind a smaller legacy. 

When considering a reverse mortgage, it’s good to talk about it with family and get independent financial and legal advice. It’s important to understand how the product works and what it might cost (including fees and interest charges). You can take a ‘worst-case scenario’ view when working out the cost projections – and not assume a property will increase in value. Consumer NZ has more information on reverse mortgages, too. 


Other ways to generate income from your home

There are other options you can consider to release value from your home: 

  • Rent out part of your home 
  • Take in a boarder 
  • Subdivide your property 
  • Sell your home to family or whānau (while retaining the right to live in it) 

Should I get rid of debt before retirement? 

Paying off debt in retirement can be more difficult. We need to make it our priority to be debt-free before we retire. If you have any expensive debt (high-interest credit card or hire purchase debt), the first step in your retirement plan should be to pay that off as quickly as possible. Here’s our guide to get out of debt fast

Prioritising the mortgage… or not 

Paying off the mortgage before you retire is the next priority – but it shouldn’t be your only retirement plan. 

On paper, the interest you pay on your mortgage can be higher than any after-tax return you may earn on your savings (with the possible exception of KiwiSaver because of the incentives).And that ‘return’ (interest saved) is guaranteed. That’s something few investments can offer. 

But there are risks in leaving serious retirement saving until after you’ve got rid of your mortgage. You may end up having a mortgage for longer than you expect, due to changes in your circumstances such as ill health or loss of work that reduce your ability to make repayments. Or a life shock like separation could upset your plans. 

The short of it is, both are needed: pay down the mortgage as you invest for retirement as well. 


Are trusts worth it? 

People usually set up trusts so they no longer legally own their house or other assets, but can continue to use and enjoy them as ‘beneficiaries’ of the trust. The most common types of trusts used by retirees are family trusts and funeral trusts – both are worth exploring thoroughly beforehand to make sure they work as you need them to.

Family trusts 

Family trusts involve the sale to a trust of your house and perhaps other assets. Family trusts can be complex and time consuming to administer. It costs money to set them up and there are ongoing legal and accounting fees. Here’s our guide to family trusts

Prepaid funeral trusts 

Prepaid funeral trusts are a way to pay funeral expenses in advance. Funeral trusts worth up to $10,000 are not considered to be assets when Senior Services is assessing eligibility for a Residential Care Subsidy.  

Don’t know where to start?

Check out our 6 steps Get Sorted programme to get you on track.

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