How much do I need to retire in comfort?

Amy Hamilton Chadwick, Authorised Financial Advisor
How much do I need to retire in comfort?

Retirement savings? For many of us the response is: ‘Please don’t make me think about this’. The whole idea seems daunting, distant and depressing.

Luckily, the Westpac Massey Fin-Ed Centre has been thinking about this for you – working out how much Kiwis are spending in retirement and what kind of lifestyle that provides.


So, how much do you need?

The short answer is that for a comfortable lifestyle with holidays and steak dinners, a single person needs around $300,000 in savings on retirement. A couple will need a bit more, up to $400,000. A simpler lifestyle will require less: between $30,000 and $80,000 for an individual and up to $70,000 for a couple.

Where will that money come from?


Baseline: NZ Super

Currently, New Zealand Superannuation pays a smidge over $20,000 a year to individuals and $30,780 a year to couples*.

It’s possible to live on this amount, particularly for those who own their own homes, but “it does not give you a great lifestyle and there are too many people who think ‘I’ve got NZ Super, I’ll be right’,” says Dr Claire Matthews, lead author of the Fin-Ed Centre’s Retirement Expenditure Guidelines.

These guidelines show what Kiwi retirees are currently spending in their retirement and exactly what they’re spending it on.


Top up your NZ Super for a ‘no frills’ lifestyle

A ‘no frills’ lifestyle means around $75 a week to spend on food for one person, or about $127 for a couple. There’s no room in the budget to run a heat pump, dishwasher or dryer.

Only couples living in metropolitan areas will have enough from NZ Super to live this no frills lifestyle, otherwise you’ll need to retire with a top-up lump sum in savings.

One person, no frills  Weekly expenditure** Annual income Lump sum required
Metro area $490 $25,480 $83,859
Provincial area $420 $21,840 $28,081


Couple, no frills  Weekly expenditure Annual income Lump sum required
Metro area $525 $27,300 None
Provincial area $680 $35,360 $70,170


Save more for a ‘choices’ lifestyle

The ‘choices’ lifestyle allows you to put a sirloin steak in the supermarket trolley, take an occasional holiday, and spend more on heating your house. Individuals spend about $125 a week on food, with couples spending around $180 a week.

The lump sums required to have this level of lifestyle for 20 years or longer are much higher than ‘no frills’. And if you want a luxury lifestyle with overseas holidays, you’ll need even more. 

One person, choices  Weekly expenditure** Annual income Lump sum required
Metro area $755 $39,260 $295,021
Provincial area $782 $40,664 $316,536


Couple, choices  Weekly expenditure Annual income Lump sum required
Metro area $1,095 $56,940 $400,857
Provincial area $1,015 $52,780 $337,110


Renters need to save more aggressively

The number of people renting in retirement does worry Matthews. Her research is on current retirees, who are far more likely to own a mortgage-free home than younger New Zealanders. Homeowners have more choices because they can downsize or relocate to free up cash in retirement.

“Home ownership is a big issue,” she says. “I know Shamubeel Eaqub says while you’re renting your costs are lower and the difference needs to be going into savings. That would be fine. But the average Kiwi isn’t doing that. They will hit retirement without owning a home, without having saved, and be in a worse situation.”

Even those who do own their homes may still be paying off a mortgage, she says, which is another concern not usually faced by the current retirees she’s studied.


KiwiSaver: anything is better than nothing

On the plus side, younger retirees will hopefully benefit somewhat from KiwiSaver, compared to the people in the study who have little, if anything, in the scheme.

“KiwiSaver does make me feel better, apart from the large number of New Zealanders who have taken a contribution holiday,” says Matthews. “For some they have a really good reason – they already have savings, or they’re self-employed. But a lot of average salary earning Kiwis think, ‘I can’t afford this’, when really, they can’t afford not to do this.”

Will most salary earners be okay if they’re putting in their regular 3% contributions? Matthews says she wouldn’t guarantee it: “I’d like to see people putting in a bit more than 3%. But even with 3% they’ll be a lot better off than if they’re putting in nothing.”


Living longer, spending less over time

You’re likely to spend more in the earlier years of your retirement when you are healthier and better able to travel. Matthews says she’s noticed her own parents and in-laws have less of an appetite for travelling, and less energy, in their late 70s than they did in their late 60s; “my mother get really tired and she can’t do as much as she’d like to.”

From their late 70s onwards, retirees spend less, but this may be offset by costs associated with medical care for those who don’t want to rely wholly on the public health system.

Another concern is that as the population ages, the usual calculation of 20 years in retirement won’t be enough for some people – more people are living into their 90s and beyond; New Zealand’s oldest woman is 108, and Statistics NZ forecasts one in 10 people born today will live into triple-digits. If your parents lived into their 90s, you may like to take that into account.


Are you on track?

If you’re in the position of being able to contribute regularly to KiwiSaver, work out your projected lump sum on a Kiwisaver calculator, put the answer into the Sorted retirement calculator, and work out what you’ll likely have by the time you retire.

Is there a scary-looking shortfall? Don’t panic yet – a little put away now can add up to a lot over time. If she was able to give New Zealanders one piece of advice about retirement savings, says Matthews, it’s this: “the earlier you start, the easier it is.”

Talk an authorised financial adviser, or contact the Family Budgeting Service for help with your retirement savings plan.


*Worried that NZ Super will be eliminated before you retire? Matthews says while that’s theoretically possible, in practice it’s extremely unlikely: “there is something of a contract between the Government and the public. Existing political parties are all committed to leaving it there, and there are really good economic arguments to continue it at this level and universal [non-means-tested qualifying].”

**How was this calculated? Weekly expenditure from the Guidelines was rounded up to the nearest $5. This was multiplied by 52 and NZ Super was then subtracted from the total annual income. The answer was plugged into a lump sum retirement calculator to generate a sum required to produce the required income for 20 years. 

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