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Source: Massey University


The Retirement Expenditure Guidelines are designed to help with retirement planning.


New Zealanders planning for retirement need to consider their savings options in a low interest rate environment, according to the latest Retirement Expenditure Guidelines produced by the Westpac Massey Fin-Ed Centre.

The 2019 report confirms most retirees supplement their New Zealand Superannuation payments with other savings or income.

The guidelines, which are produced annually, calculate what retirees currently spend to maintain either a ‘no frills’ retirement, or a more fulfilling ‘choices’ lifestyle that includes some luxuries. Costs are calculated for one and two-person households in both metropolitan (Auckland, Wellington and Christchurch) and provincial areas.  

The 2019 guidelines calculate a two-person household living in the city would need to have saved $787,000 to fund a ‘choices’ lifestyle, while a couple living in the provinces would need to have saved $493,000. The lump sums required for a ‘choices lifestyle’ for a one-person household are $764,000 and $411,000 for metropolitan and provincial areas respectively.

New Zealand Superannuation had increased by 2.56 per cent but fell short of covering all of the expenses for most retirees. 

Only two-person provincial households living a ‘no frills’ lifestyle come close to being funded by New Zealand Superannuation. A metropolitan two-person household with a ‘no frills’ lifestyle would still require savings of $261,000 at retirement to supplement their superannuation.

Report author Dr Claire Matthews.


Consider your retirement options

Report author, Dr Claire Matthews from the Massey Business School, says it is important for people to carefully consider their retirement options.

“While the lump sum required to fund the difference in spending over New Zealand Superannuation can seem daunting, it can be reduced by continuing to work either full or part-time, or by delaying retirement for a couple of years,” she says.

“If you delayed your retirement for two years, continued working and saved all your NZ Superannuation payments, it would make a significant impact to your retirement nest egg.”

The report also highlights the challenges of a low interest environment for retirees and the need to carefully plan the decumulation period of retirement. Westpac NZ general manager of consumer banking and wealth, Simon Power, says the historically low interest rates present challenges and opportunities.

Savers are facing lower returns as term deposit rates fall. However, decreasing home loan rates are helping more Kiwis pay off their mortgage as they approach retirement age, giving them greater financial security and peace of mind, he says.

“It’s never too early or too late to start planning for retirement, and we encourage all New Zealanders to regularly consider their savings goals and think about how they’ll fund the retirement they want.”

Chief executive of the Financial Services Council Richard Klipin says planning for retirement could mean the difference between a comfortable retirement or not. “There is plenty of good advice out there to help and it’s easy to start saving what you can through schemes like KiwiSaver.”

About the Retirement Expenditure Guidelines

The Westpac Massey Fin-Ed Centre, or Financial Education and Research Centre, is a joint initiative by Westpac and Massey University that aims to improve the financial wellbeing of New Zealanders. The Financial Services Council provides financial support to produce the Retirement Expenditure Guidelines, which are based on figures from Statistics New Zealand’s triennial Household Economic Survey, adjusted for the effect of inflation. It is important to note the guidelines do not represent recommended levels of expenditure, but reflect actual levels of expenditure by retired households.

Read the full report.

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