How much do I need to retire in New Zealand?

Having enough money to retire is less about a number and more about what you want out of the second half of your life.

By Alex Brooks

The eternal question for people who want to retire is ‘how much money will I need?’

The answer is: ‘how much are you likely to spend?’

Don’t you hate it when people answer questions with questions?

How much do you really need each week to retire in New Zealand?

Most people only ever guesstimate their spending, given fast-changing things like inflation, interest rates, rising insurance prices and all those other blah blah blah boring things that make it so hard to get your money sorted.

Thankfully, Massey University publishes a helpful guide to retirement expenses in New Zealand, which breaks down the costs for singles and couples based on national statistics around household spending.
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These retirement expenditure guidelines are updated each year to help people understand what it costs to manage weekly expenses on a ‘no frills’ budget versus those following a ‘choices’ budget, which could include extras like private health insurance and occasional travel.

There are also cost differences for those living in metropolitan areas like Auckland compared to those living in provincial areas, where housing, transport or insurance costs might be different.
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The Massey University number crunchers say it costs as little as $689.54 a week for a single retired person living in a provincial location on a ‘no frills’ budget up to $1665.85 a week for a retired couple living in a big city in New Zealand on a ‘choices’ budget.

The different 2023 weekly expenditure guidelines for a ‘no frills’ retirement in 2023 include:

●  singles in metropolitan areas can spend $826.26

●  singles in provincial areas can spend $689.54

●  couples in metropolitan areas can spend $982.02

●  couples in provincial areas can spend $849.82.

If a ‘choices’ budget is more your style, then the 2023 weekly expenditure guidelines in retirement include:

●  singles in metropolitan areas can spend $982.02

●  singles in provincial areas can spend $849.82

●  couples in metropolitan areas can spend $1665.85

●  couples in provincial areas can spend $1330.30

 
These numbers are more of a handy guideline rather than a silver bullet to working out what you need.

The truth is that everyone has different hopes - and expenses - to live the retirement they want.

Some of us will be happy that New Zealand pays NZ Super - a universal pension that everyone over the age of 65 who is eligible can access. But is it enough?

Can’t I just live on NZ Super? Only you can say

Most people who live in New Zealand over the age of 65 will get NZ Super, regardless of whether you’re still working or not. 

But is government superannuation enough? It’s a good start, but it might not be enough for everyone.

I had to concentrate for a long time to come up with the table below (I'm not great at maths). It’s helpful to see the Massey University guidelines compared to NZ Super and what sort of lump sum you might need.

So for people who have been smart with KiwiSaver or with other investments, they might be able to meet the Massey University guidelines easily.

An alternative view of retirement costs

For the rest of us, coming up with how much you need to save for your ideal retirement is a better question to ask.

The subset of these questions include things like:

-Where do you want to live? Provincial is obviously cheaper than metro, but not if you need to spend all your money on petrol driving into the metro areas to see your family and friends (or work!)

-How much will it cost to live a life that’s joyous and meaningful for you (and maybe your partner)?

-Will you want more than mere ‘choices’ in your budget, for example, do you need to visit family overseas each year or have health or other fixed costs that can’t be avoided?

Seeking joy by doing things, not having things. Living in a home that has minimal maintenance (and maximum protection from annoying things like fires, floods and storms) are all non-financial ways to lower the cost of your weekly retirement expenses.

Basic statements about your deep values and retirement goals can help organise your thoughts - and the mathematics - of how much you need to spend simply to live, breathe and enjoy each week of your retirement.

That way, the cost can match your expectations.

Close relationships - more than money - keep people happy over the age of 65. So prioritise those, not numbers.

This article reflects the views and experience of the author and not necessarily the views of Citro. It contains general information only and is not intended to influence readers’ decisions about any financial products or investments.  Readers’ personal circumstances have not been taken into account and they should always seek their own professional financial and taxation advice that takes into account their personal circumstances before making any financial decisions.