How much is enough?

 Retirement Expenditure Guidelines shows there is a growing gap between the cost of living in retirement and New Zealand Superannuation payments. Kaspanz has regularly published articles concerning “How Much do you need” and this 2015 Research adds to the mix.

Dene Mackenzie on Tuesday 10 November, 2015 ran this article in the Otago Daily Times

Even a no-frills retirement requires extra savings, a report released yesterday says. The need for a top-up between what the Government provides for New Zealand Superannuation and what retired people need will come as no surprise to many. Couples would need more than $550,000 in their Kiwi Saver account to have choices in their retirement. The Westpac-Massey University report, in partnership with Workplace Savings, showed there was a growing gap between the cost of living in retirement and superannuation payments. The report has found for almost every type of New Zealand household and level of expenditure surveyed, there was a gap between expenditure by people aged 65-plus and the income provided by NZ super.

The only exception was the ”no-frills” metro two-person household group. ‘It can be concluded that most New Zealanders will need to save throughout their working lives if they aspire to a better standard of living in retirement than NZ Superannuation alone can support,” Massey University’s Claire Matthews, the report’s author, said.

A one-person household in a metropolitan area was now spending $489.77 per week for a no-frills retirement but a single person living in the provinces was spending $416.92 per week.

The figures for individuals wishing to add some luxuries to their lifestyle were $754.03 per week and $782.02 per week for metropolitan and provincial residents respectively. Given the current NZ super payment for a single person living alone was just $374.53 a week, it quickly became apparent retirees would need additional income to survive, Dr Matthews said. ”That’s even the case when spending is limited to the essentials. The shortfall quickly widens if you want a more comfortable lifestyle.” The choices lifestyle was not about being extravagant, she said.

It meant not having to watch every cent and being able to enjoy treats from time to time, like going out for a meal, not buying the cheapest cuts of meat, doing some travel or going to the movies or theatre.

Only two-person metropolitan households could achieve no-frills retirement with the standard rate of super which was $576.20 a week for a couple. Couples living in the provinces, or those wanting a choices lifestyle would need additional savings, Dr Matthews said.

Calculations from the retirement planner tool on the site showed a single female would need to have $113,216 saved by 65 to live a no-frills retirement. For a 25-year-old that would require saving $46 a week, but for a 50-year-old it jumped to $144 a week. Dr Matthews said it was much easier for the 25-year-old, especially if they were employed and signed up to Kiwi Saver, as around half of that money could come from their employer contribution and the government subsidy.

”What it shows is you do need to start [saving] early. The reality is the best time to start is when you start working.” If young people started contributing to Kiwi Saver from their first job it would be built into their income expectations, so they would not feel they were missing out, she said.


Posted by Alec

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.