What’s NZ Super worth? Let’s say you were aiming to generate $411 a week (the new NZ Super rate for individuals as of 1 April) for the next 30 years. How much money would you need in the bank?

Using Sorted’s retirement planner, it looks to me like you’d need to have close to $450,000 in a balanced fund and draw it down entirely over those three decades (a net real return of 2.4%). That’s to spin off $411 each week.

The thing is, many of us will undoubtedly need more than $411 per week to live on, especially if we need to cover housing costs like rent, rates, insurance and maintenance. Not to mention all the other activities we’re hoping to knock off our bucket lists when we step back from full-time work.

We’re fortunate to have NZ Super already in place, so we don’t have to go looking for that first $450,000. We can focus on the amount we’ll need on top of that.

Mind the gap

It’s all about the gap. The gap between what you’ll need and what you’re on track to have. Nailing your retirement number gives you the time to achieve the lifestyle you’re after.

Nowadays 60 per cent of people above 65 depend entirely or largely on NZ Super for their income. Forty per cent have virtually no other income. It keeps a lot of us out of hardship.

As a pension system, NZ Super is relatively inexpensive compared to others around the world. But because many more of us are living longer these days, it is becoming more difficult to sustain. Many 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 NZ Super could very well be paid out later than it is now or at a different amount.

The gap could widen.

How are you tracking in KiwiSaver?

For most of us, that gap will be filled by saving and investing. Like many things, the trick is to start early and start small. Those consistent savings, coupled with the compounding returns from investing, will be what it takes to bridge the gap. KiwiSaver can certainly help.

Estimate how much you’ll have in KiwiSaver when you retire, which allows you to make decisions on whether you’d like to increase your contributions or change what type of fund you’re in – to aim for even better results. (You can also try this chatbot for fun.)

I often fall into the trap of thinking that just because I’m in KiwiSaver, I’m set for life. But many of us will need other investments besides KiwiSaver to ensure our gap will definitely be filled.

Nail your own number

How far away is your retirement? How long does your money need to last? What’s your target number above NZ Super?

Run your own retirement projections today, and play with the numbers a bit until you nail yours. It’s the beginning of a plan.

Once you know, you’ll find ways to hit your mark. And depending on where you’re at in life, you’ll have options when it comes to planning for the future.

Comments (3)

Gravatar for Miriam Brown

Miriam Brown

4:02pm | 24 Jun 2019

Why? save and contribute to Super. When the majority have & always will be paid out in WELFARE Benefits. Not only Grandparents. their kiddies. their kiddies kiddies & their KIDS.The more kids they have, or bring to the table. Uncle & Aunty Winzs are there. To give them hand-outs. So who's kidding who.Which ever way everybody is paying taxes/fees/admin/ fine print with hidden costs, taking loans here & there,cost of living you should be ashamed NZ Government. When you save, money goes where. NO where. We pay taxes etc on Ksaver, when you retire.You still paying taxes. WHY. I think I'll go to Aunty & Uncle Winz. Ooh!! they are the ones distributing your retirement funds.You are then 'Officially Unemployed" What!! never in your Working Life, ever considered that., you are unemployed. Get Real People.Unemployment is the new black. Not RETIREMENT.

Gravatar for Alec Kynaston Waugh

Alec Kynaston Waugh

2:04pm | 9 Jun 2019

NZ Super is simple and cost effective, There is no reason why it wont be there for future generations, and its great for women, not being linked to work or partner. Most commentators outside of NZ believe our model of NZ Super and Kiwi Saver lead the world. Its time we acknowledged NZ Super as a great scheme

Gravatar for The Fiminator

The Fiminator

12:45pm | 20 Apr 2018

Nice post Tom. You bring up some very salient points to the table. There is no doubt a Government in the future will raise the Super age. There is also a chance that Super will eventually be reduced dramatically and people will be expected to live off their Kiwisaver. So its really wise to plan now and plan early. When I look back 20-30 years, I wish I had planned a lot better but at the time I had no idea of what I should do or if I should really think about retirement at all. Financial education needs to be the norm in NZ education facilities, not the exception.