How much do you really need to retire in NZ?

Written by Money Empire

September 11, 2019

When you’re young, retirement probably isn’t something you consider. And fair enough too, it’s a few decades from now and you’ve got more urgent things to worry about. 

With that said, the key to an awesome retirement is putting a smart financial strategy in place and sticking to it as early as possible. To get you started, let’s take a closer look at how much you really need to save and how you can make it happen. 

How much do I really need for retirement?

The amount that you need depends entirely on your personal circumstances and what kind of retirement you want to enjoy. 

Assuming you qualify for superannuation, you’ll get around $20,000 a year if you’re by yourself and $30,780 if you’re partnered. To live a no-frills lifestyle in metro NZ without overseas holidays, meals out, or using energy heavy appliances, you’ll need this much, according to Massey University’s Retirement Expenditure Guidelines:

  • Single: Lump sum before retirement of $83,859 plus super. 
  • Couple: No lump sum required, super is enough. 

If you want a little more comfort and luxury in retirement (let’s be honest we all do) the guidelines suggest saving more to retire. This amount will allow you to shop at New World instead of Pak n’ Save, go on the occasional holiday and run the heating and dryer in your home during winter:

  • Single:  Lump sum before retirement of $295,021 plus super.
  • Couple: Lump sum before retirement of $400,857 plus super.

If you want to go on holidays often and shop at Farro, you’ll have to save even more. In New Zealand, we’re lucky that our superannuation isn’t means-tested so regardless of how much you save for retirement, you’re still entitled to your super.

What’s the best way to set myself up for retirement?

The best thing anyone can do for their retirement is to start planning and saving right now. If you start early and put your money in the right places, even a small amount of monthly savings can grow into an amazing retirement given time. On top of that you should also:

Pay down debt

Debt makes it hard to save and to retire comfortably whether it’s credit cards, a home loan or a student loan. That’s why one of the best things you can do for your retirement right now is to pay down your debt as quickly as possible.

Boost your KiwiSaver

If you’ve already bought your first home, you can’t touch your KiwiSaver, which makes it a great way to ensure your savings are kept for retirement. Plus the Government and your employer have to contribute to your fund if you meet certain conditions. Seek advice from a registered financial advisor to make sure you’re in the right fund for your circumstances and start boosting your KiwiSaver today. 

Invest smartly

In most cases, it’s best not to have your retirement money sitting in a bank account or under your mattress. Instead, it’s usually better to make your money work for you by investing it smartly. There are risks involved and the right investment will depend on your circumstances, so make sure you seek proper financial advice before you do. 

Seek expert advice

Retirement is so far off in the distance so you might feel like you don’t need to do something now but the earlier you start, the better it will be. To start planning for a better retirement, get in touch with the team of financial experts here at Money Empire. We’ll lay out a detailed blueprint from now to your retirement to make sure your golden years are spent in style. 

* The information provided or any opinions expressed in this article are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any financial decisions.

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