How much money do I need to retire?
How Much Will You Really Need?
Everyone's retirement looks different—will you live modestly or enjoy luxuries? Planning for retirement is as much about lifestyle choices as it is about financial preparation. Whether you see yourself traveling the world, enjoying hobbies, or sticking to a quiet life at home, the amount you’ll need will vary widely.
Therefore, a critical step in retirement planning is deciding early on how you want to live. Are you comfortable scaling back, or do you want to enjoy certain comforts? Your decision will influence how much you need to save and how you allocate your funds as you near retirement. The key is to estimate your future living costs realistically and adjust your savings goals accordingly.
Planning for retirement can feel like a big task, especially when you’re trying to figure out how much money you’ll actually need. While NZ Superannuation offers some income, most people will need to save more to live comfortably. Let’s break down how much you’ll likely need to retire in New Zealand—and how to plan for it.
Is NZ Super Enough?
For most New Zealanders, NZ Super is a helpful base but not enough on its own to cover all expenses. Currently, it provides:
$496.37 per week for single retirees
$763.64 per week for couples
While this covers basic living costs like food and bills, it’s unlikely to support the lifestyle many of us envision for retirement—especially if you want to enjoy hobbies, travel, or treat yourself now and then.
So, How Much Extra Will You Need?
Think about your retirement in terms of two main lifestyles:
Basic Lifestyle (No Frills): This is a simpler retirement, covering essentials but with little room for extras.
Comfortable Lifestyle (Choices): This allows for more leisure, dining out, and other activities.
Here’s a rough idea of the gap between what NZ Super provides and what you’ll likely need for these lifestyles:
Basic Lifestyle: If you live modestly, you might spend around $826 a week (if single) or $982 a week (as a couple). This leaves a gap of about $330 per week for singles and $218 per week for couples.
Comfortable Lifestyle: If you want to spend more on travel, dining out, or hobbies, your costs could rise to about $1,163 a week (single) or $1,665 a week (couple), leaving a much bigger gap—$667 per week for singles and $902 per week for couples.
Difference in NZ Super Payments and Retirement Spending
How Much Should You Save?
To fill the gap between NZ Super and your desired lifestyle, you'll need savings and/or investments. Here’s a simplified look at what you’ll need over a 25-year retirement:
For a basic lifestyle, a single person may need around $355,000 in savings to cover the gap left from NZ Super, and a couple may need around $235,000 as they will be getting more income from NZ Super payments.
For a comfortable lifestyle, those numbers jump to about $717,000 for singles and $969,000 for couples (NZ Retirement Expenditure Guidelines 2023).
NZ Super Gap - Lump Sum Requirement
Weekly Savings Required to meet Lump Sum Figure
The Rising Costs of Retirement
Don’t forget that over the years inflation will increase the cost of living. It’s important to build this into your calculations, as the value of your money today won’t be the same in 10, 20, or 30 years. Food prices alone increased by 12.3% between 2022 and 2023.A general rule is to assume an average inflation rate of 2–3% per year.
Ways to Reduce How Much You Need to Save
If those numbers seem high, don’t worry! There are ways to reduce how much you need to save:
Work part-time in retirement: Many people find that working a few days a week in retirement keeps them active and helps cover some costs or allows for spending money.
Adjust your spending: Being mindful of non-essential spending can make a big difference.
Invest wisely: Choosing the right KiwiSaver fund, particularly a growth fund, could help your savings grow faster - talk to us today about adjusting your KiwiSaver strategy with your retirement goals in mind.
Start Early and Review Regularly
Retirement planning doesn’t have to be overwhelming if you start early and review your strategy regularly. Tools like Sorted’s Retirement Calculator can help give you an idea of roughly how much you need to save. If you are after something much more comprehensive, our retirement planning quiz is a great place to start - once we have gathered some information about your situation we can make projections on your investments, model cashflow and create a drawdown plan for you going into retirement. Please get in touch today if you want to see how your money can work for you in retirement.
If you are interested in learning more about our process, take a look at this video here where Adam walks through a retirement planning scenario.
Compound Wealth are a KiwiSaver, Retirement and Private Wealth Financial Advice Firm based in Mount Maunganui, Bay of Plenty with clients all over New Zealand.
