Retirement planning - Saving for 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 that will help to make retirement fun and comfortable. 

How much will I need to retire?

Everyone’s retirement needs are different. To work this out, start by thinking about how long you will have in retirement, what sort of lifestyle you will want, and where you will live. 

How many years will I have in retirement?

There is no ‘retirement age’ in New Zealand. NZ Super is paid from age 65, but you don’t have to stop working to get it. These days, 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 need to save or have another plan to provide the income you want for 25 years or more, and make sure your money lasts as long as you do.

What sort of retirement lifestyle do I 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.

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?

Will I live in my own home or rent?

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.

However, owning the place you live in, debt-free, will reduce 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.

Budget for retirement

Getting close to retirement? It might be a good time to work out a detailed budget. Think about what weekly expenses might be in today’s money.

  • Take basics into account, such as insurance, maintaining the house and car, or replacing a major appliance.
  • Build in some funds for the unexpected.
  • Think about the big things that might need to be paid for later on – like a new car, new roof or repainting the house.

Make a retirement budget with our budgeting tool.


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Where will the money come from?

Paying off debt in retirement can be more difficult. We need to make it our priority to be debt-free before we retire.


Many retired New Zealanders get their income from two main sources – NZ Super, and their own savings. However it is estimated that around 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 such as:

  • Our own savings
  • Income and nest eggs from retirement savings schemes like KiwiSaver, other pensions and workplace savings, investments, and cash deposits
  • Employment

We may prefer and be able to keep working, either full-time or part time (as long as we have the skills and capacity). Around a third of Kiwis continue some form of paid work past age 65.

Other sources of income could include investment income from the sale or rental of property, the sale of a business or an inheritance.

Use our retirement planner to work out how much to save.


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Getting rid of debt

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.

Guide to managing debt

Stepping around the mortgage trap

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 is usually higher than any after-tax return you could earn on your savings (with the possible exception of KiwiSaver – see below) – 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.

How KiwiSaver can help

The extra benefits KiwiSaver offers make it a great option for retirement saving – even if you have a mortgage.

As well as the money you put in and any growth in your savings over time, you also get regular contributions from our employer. These are on top of the annual contributions that KiwiSaver members receive from the government.

All 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.

Guide to KiwiSaver

Try our KiwiSaver account calculator to see how it all adds up.


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Don’t know where to start?

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

Head to the 6 steps