Why Planning Matters

Even if it seems a long way off, it pays to plan for your retirement as early as possible.  Most people end up relying on NZ Super (the government pension) and their own savings for income in retirement.  How much you’ll need to save will depend on your own circumstances, but the sooner you start, the more you will have.

  • How much will you need?
  • Where will your money come from?
  • Getting rid of dumb debt
  • Watch out for the mortgage trap
  • How KiwiSaver can help

How much will you need?

Everyone’s retirement needs are different. To work out how much you'll need, think about how long you'll have in retirement, what sort of lifestyle you'll want, and where you'll live. 

How many years will you have in retirement?

Tip: There is no ‘retirement age’ in New Zealand. NZ Super is paid from age 65, but you don’t have to stop working to get it. These days, more and more people are working beyond 65 either full-time or part-time.

People are living longer these days. On average, 65-year-old men can now expect to live until they're 86, and 65-year-old women until they're 88.

In the future, we'll probably live even longer. Men reaching 65 in 2031 can expect to live until they're 88 and women until they're at least 90.

Let’s say you plan to retire at 65. You'll need to save or have another plan to provide the income you want for 20 years or more.

And remember, things may not go the way you hope. For example, you may get sick or have some other reason for not working as long as you expect.

What sort of retirement lifestyle do you want?

What will your cost of living be in retirement? Some of your costs may go up (like healthcare) while others (such as education, clothing, housing, work-related travel) may go down. If you have children, they'll probably be financially independent.

You'll also need to think about what your goals might be in retirement – travelling to new places, joining clubs, going out to dinner and shows???

Will you live in your own home or rent?

If you rent, you’ll need more savings to cover the cost – but on the other hand, you won’t have money tied up in a home.

However, owning the place you live in debt-free will reduce the risk of rent increases or being asked to find a new place to live. You'll have more control over your finances though you'll have to take care of maintenance and rates.

Being mortgage-free by retirement is a great goal to aim for. The reason many people currently in retirement are able to manage financially is because they no longer have the burden of mortgage repayments.

Budget for retirement

If you’re close to retirement, work out a detailed budget. Think about what your weekly expenses might be in today’s money.

  • Take basics into account, such as insurance, maintaining your house and car, or replacing a major appliance.
  • Build in some funds for the unexpected.
  • Think about the big things you might need to pay for later on like a new car, new roof or repainting the house.

Where will your money come from?

Paying off debt in retirement is very hard. So make it your number one priority to be debt-free before you retire.

Many retired New Zealanders get their income from two main sources – NZ Super and their own savings. However it's estimated that around 40% of New Zealanders over the age of 65 rely on NZ Super alone.

Take a look at the current rates of NZ Super - could you live on that amount?

Most likely, there'll be a gap between the income NZ Super provides and the income you want in retirement. So you'll need to have other sources of your own such as:

  • Your savings such as income and lump sums from retirement savings schemes like KiwiSaver, other pensions and workplace savings, investments, cash deposits
  • Employment - you may prefer and be able to keep working either full-time or part time as long as you have the skills and capacity. Around a third of Kiwis continue some form of paid work past age 65.

Other sources of income could include investment income from the sale or rental of property, the sale of a business or an inheritance.

Use the retirement calculator on our Calculators page to work out how much you'll need to save or give us a call on 03 470 1030 if you'd like to discuss this in person.

Getting rid of dumb debt

If you have any ‘dumb debt’ (high-interest credit card or hire purchase debt), the first step in your retirement plan should be to pay that off as quickly as you can.

Watch out for the mortgage trap

Paying off your mortgage before you retire is the next priority but make sure that it is not your only retirement plan.

On paper, the interest you pay on your mortgage is higher than any after-tax return you could earn on your savings (with the possible exception of KiwiSaver – see below) – and that ‘return’ (interest saved) is guaranteed.  That’s something few investments can offer.

But there are risks in leaving serious retirement saving until after you’ve got rid of your mortgage. 

You may end up having a mortgage for longer than you expect, due to changes in your circumstances such as ill health or loss of work, that reduces your ability to make repayments. Or a life shock like separation could upset your plans.

How KiwiSaver can help

The extra benefits KiwiSaver offers make it a great option for retirement saving, even if you have a mortgage.

As well as the money you put in and any growth in your savings over time, you also get regular contributions from your employer. These are on top of the $1,000 kick-start and annual contributions that KiwiSaver members receive from the government.

All this extra money means your own savings will produce higher returns than other options where you're the only one who contributes. This makes it easier to reach your retirement savings goal.

Using KiwiSaver in Retirement

KiwiSaver is now a smart way of managing your income needs in retirement. It offers:

  • a convenient place to have your funds where they will continue to grow
  • flexible investment choices to suit all risk profiles
  • easy access to your funds when you need them
  • the ability to set up a regular withdrawal from as little as $250 per fortnight or per month
  • very low fees 


Visit our "What is KiwiSaver" page to find out more, or for help just call us on 03 470 1030.