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Retirement is a major life goal for many people. It is the time when you can enjoy the fruits of your hard work, pursue your passions, and spend more time with your loved ones. However, retirement also comes with its own challenges and uncertainties. How much money do you need to retire comfortably? How can you save enough for retirement? What are the best ways to invest your money for retirement? These are some of the questions that you may have as you plan for your future.
In this article, we will provide you with some useful information and tips on how to save for retirement in New Zealand. We will explain what retirement means, why it is important to save for retirement, what factors affect how much money you need to save, and how much you need to save based on your desired lifestyle. We will also introduce some of the advanced investment strategies that can help you grow your savings and achieve your retirement goals. By the end of this article, you will have a better understanding of how to prepare for retirement and make the most of it.
The amount of money you need to save for retirement will depend on several factors, such as:
There is no one-size-fits-all answer to this question. The amount of money you need to save will depend on your individual circumstances, such as your age, income, expenses, and lifestyle expectations.
However, there are some general guidelines that can help you estimate how much you need to save. One rule of thumb is to save 10-15% of your income each year. This will help you build up a nest egg that you can use to supplement your income in retirement. Another rule of thumb is to aim to replace 70-80% of your pre-retirement income in retirement. This will give you a comfortable standard of living in retirement.
The NZ Retirement Expenditure Guidelines report by Massey University provides estimates of how much money you need to retire in New Zealand, depending on the type of lifestyle you want. The report categorizes three types of retirement lifestyles: no-frills, choices, and deluxe. If you are a single person living outside the main cities, you need to retire with an income of $605 per week for a no-frills lifestyle, $1,000 per week for a choices lifestyle, or $1,500 per week for a deluxe lifestyle. If you are a couple living outside the main cities, you need to retire with an income of $800, $1,300, or $1,800 per week for a no-frills, choices, or deluxe lifestyle respectively.
Assuming an average interest rate return of 6% on their investments over the relevant period, the graph below shows how much couples who would like to retire with a deluxe lifestyle ($1,800 per week) would need to save each week, or each year, by age groups:
The Massey University study is an annual report that provides information about the actual levels of expenditure by New Zealanders who have already retired. The study uses data from the Household Economic Survey conducted by Stats NZ to categorize three types of retirement lifestyles: no-frills, choices, and deluxe. The no-frills lifestyle covers only the basics, such as food, housing, utilities, health care, and transport. The choices lifestyle allows for some extras, such as entertainment, travel, hobbies, and gifts. The deluxe lifestyle includes more luxury and discretionary spending, such as overseas holidays, new cars, and fine dining.
The study also compares the costs of these lifestyles with the amount of NZ Superannuation, which is the government pension scheme that pays a fixed amount to eligible retirees. The study shows that NZ Superannuation is not enough to cover even the no-frills lifestyle for most retirees, especially for those living in the main cities or renting their homes.
The study aims to help pre-retirement New Zealanders plan for their retirement by providing realistic and up-to-date estimates of how much they need to save and spend in retirement. You can find the latest report (2022) here.
There is no definitive answer to how much you should have saved by now for a luxury lifestyle in retirement in New Zealand, as it depends on your personal circumstances and goals. However, there are some tools and guidelines that can help you estimate how much you need to save based on your desired retirement income and age.
One tool is the retirement calculator by Sorted, a financial education website run by the Commission for Financial Capability. This tool allows you to enter your current age, income, savings, investments, and desired retirement age and income. It then calculates how much you need to save each year and how much you will have in retirement. You can access the retirement calculator from Sorted here.
There are a number of ways to save for retirement. Some popular options include:
Annuities can be a good option for people who want to ensure that they have a guaranteed income stream in retirement. However, there are some potential drawbacks to annuities, such as high fees and the fact that you may lose access to your money if you need it before retirement.
Investing involves putting your money into assets that have the potential to grow in value over time, such as shares, bonds, property, or commodities. Investing can help you:
However, investing also involves risks and challenges. Investing can expose you to:
Therefore, investing requires careful planning, research, and management. You may want to consider factors such as:
You may also want to seek financial advice from a qualified and trustworthy professional who can help you with investing. A financial advisor can help you:
The best way to save for retirement will depend on your individual circumstances. You may want to consider factors such as your risk tolerance, time horizon, tax situation, and personal preferences. You may also want to diversify your savings across different options to reduce your exposure to market fluctuations and maximize your returns.
Saving for retirement can be a complex and challenging task. You may have questions or doubts about how much to save, where to save, and how to save. You may also face obstacles or difficulties along the way, such as changes in your income, expenses, or goals. That’s why it can be helpful to seek financial advice from Echo Financial Advisors Ltd. (Qualified and trustworthy professionals). A financial advisor can help you:
To find a good financial advisor, you may want to:
Inflation is the general increase in the prices of goods and services over time. Inflation reduces the purchasing power of money, meaning that you can buy less with the same amount of money. Inflation can affect your retirement planning in several ways, such as:
Therefore, it is important to take inflation into account when planning for your retirement. You may want to:
Inflation is not a new factor to consider in your retirement planning, but it has become a lot more important, as it has risen to 7.3% for the twelve months ended 30th June 2022, which is the highest rate since 1990. Inflation can have significant impacts on your retirement income and expenses, so it is wise to plan ahead.
New Zealand superannuation (NZ Super) is a government pension scheme that pays a fixed amount to eligible retirees. NZ Super is designed to provide a basic income for retirees and supplement their other sources of income, such as savings, investments, or work.
You may be able to get NZ Super payments if you are:
There are some exceptions and variations to these criteria, such as if you have lived or worked in certain countries that have social security agreements with New Zealand, or if you are living in the Cook Islands, Niue, or Tokelau.
You need to apply for NZ Super. You do not automatically get it once you turn 65. You can apply up to 12 weeks before your 65th birthday.
The amount of NZ Super you can get depends on your marital status, living situation, and income. The rates are adjusted each year based on the Consumers Price Index (CPI), which measures the average change in prices of a basket of goods and services.
As of 1 April 2022, the net weekly rates of NZ Super (after tax) are:
You may also be eligible for extra financial help, such as the Accommodation Supplement, Disability Allowance, or Winter Energy Payment.
You can still get NZ Super if you work or travel, but there may be some effects on your payments.
If you work, you can earn any amount of income without affecting your NZ Super payments. However, your income may affect your tax rate and any extra financial help you receive.
If you travel overseas temporarily, you can still get NZ Super for up to 26 weeks in most cases. However, your payments may be affected by the length of your absence, the country you visit, and any overseas pension or benefit you receive.
If you move overseas permanently, you may be able to get NZ Super in some cases. However, your payments may be affected by the country you move to, any overseas pension or benefit you receive, and any social security agreement between New Zealand and that country.
NZ Superannuation (NZ Super) is an important benefit designed to support our beloved seniors aged 65 and older. It aims to provide a basic standard of living, but it's crucial to recognize that relying solely on NZ Super may not cover all your expenses or fulfill your retirement dreams.
Let's explore some of the potential pitfalls of relying solely on NZ Super:
Firstly, housing costs can be a significant concern, particularly if you're renting or have a mortgage. Depending solely on NZ Super may not provide enough income to meet these expenses.
Additionally, unexpected costs like medical bills, home repairs, or car maintenance can catch you off guard. Without additional income sources, managing these expenses can become challenging.
Retirement is a time to savor life's pleasures, including hobbies, travel, entertainment, and the joy of giving gifts. Depending solely on NZ Super may limit your ability to enjoy these experiences to the fullest.
Moreover, relying solely on NZ Super might make it difficult to leave an inheritance for your loved ones or offer them financial support when they need it.
It's important to note that the NZ Super eligibility criteria, payment rates, and tax rules are subject to change. Relying exclusively on NZ Super leaves you vulnerable to any future alterations that may impact your income.
Considering these factors, it is advisable to explore additional income sources in retirement. Building savings, investing wisely, participating in KiwiSaver, considering annuities, or engaging in part-time work can provide the financial security and flexibility needed to achieve your retirement goals.
Remember, planning for retirement is a personal journey, and it's crucial to make choices that align with your aspirations and circumstances.
For more information about NZ Super, visit:
Retirement planning is an important and personal process that requires careful consideration of your goals, circumstances, and options. There is no one-size-fits-all answer to how much money you need to save for retirement in NZ, as it depends on the type of lifestyle you want, your age, income, expenses, and other factors.
However, there are some tools and guidelines that can help you estimate how much you need to save and how to save effectively. You may also want to seek financial advice from a qualified and trustworthy professional who can help you create and manage your retirement plan.
By starting to save early and making smart financial decisions, you can ensure that you have a comfortable and enjoyable retirement in NZ.
The amount of money you need to save for retirement will depend on several factors, such as:
There is no one-size-fits-all answer to this question. The amount of money you need to save will depend on your individual circumstances, such as your age, income, expenses, and lifestyle expectations.
However, there are some general guidelines that can help you estimate how much you need to save. One rule of thumb is to save 10-15% of your income each year. This will help you build up a nest egg that you can use to supplement your income in retirement. Another rule of thumb is to aim to replace 70-80% of your pre-retirement income in retirement. This will give you a comfortable standard of living in retirement.
The NZ Retirement Expenditure Guidelines report by Massey University provides estimates of how much money you need to retire in New Zealand, depending on the type of lifestyle you want. The report categorizes three types of retirement lifestyles: no-frills, choices, and deluxe. If you are a single person living outside the main cities, you need to retire with an income of $605 per week for a no-frills lifestyle, $1,000 per week for a choices lifestyle, or $1,500 per week for a deluxe lifestyle. If you are a couple living outside the main cities, you need to retire with an income of $800, $1,300, or $1,800 per week for a no-frills, choices, or deluxe lifestyle respectively.
Assuming an average interest rate return of 6% on their investments over the relevant period, the graph below shows how much couples who would like to retire with a deluxe lifestyle ($1,800 per week) would need to save each week, or each year, by age groups:
The Massey University study is an annual report that provides information about the actual levels of expenditure by New Zealanders who have already retired. The study uses data from the Household Economic Survey conducted by Stats NZ to categorize three types of retirement lifestyles: no-frills, choices, and deluxe. The no-frills lifestyle covers only the basics, such as food, housing, utilities, health care, and transport. The choices lifestyle allows for some extras, such as entertainment, travel, hobbies, and gifts. The deluxe lifestyle includes more luxury and discretionary spending, such as overseas holidays, new cars, and fine dining.
The study also compares the costs of these lifestyles with the amount of NZ Superannuation, which is the government pension scheme that pays a fixed amount to eligible retirees. The study shows that NZ Superannuation is not enough to cover even the no-frills lifestyle for most retirees, especially for those living in the main cities or renting their homes.
The study aims to help pre-retirement New Zealanders plan for their retirement by providing realistic and up-to-date estimates of how much they need to save and spend in retirement. You can find the latest report (2022) here.
There is no definitive answer to how much you should have saved by now for a luxury lifestyle in retirement in New Zealand, as it depends on your personal circumstances and goals. However, there are some tools and guidelines that can help you estimate how much you need to save based on your desired retirement income and age.
One tool is the retirement calculator by Sorted, a financial education website run by the Commission for Financial Capability. This tool allows you to enter your current age, income, savings, investments, and desired retirement age and income. It then calculates how much you need to save each year and how much you will have in retirement. You can access the retirement calculator from Sorted here.
There are a number of ways to save for retirement. Some popular options include:
Annuities can be a good option for people who want to ensure that they have a guaranteed income stream in retirement. However, there are some potential drawbacks to annuities, such as high fees and the fact that you may lose access to your money if you need it before retirement.
Investing involves putting your money into assets that have the potential to grow in value over time, such as shares, bonds, property, or commodities. Investing can help you:
However, investing also involves risks and challenges. Investing can expose you to:
Therefore, investing requires careful planning, research, and management. You may want to consider factors such as:
You may also want to seek financial advice from a qualified and trustworthy professional who can help you with investing. A financial advisor can help you:
The best way to save for retirement will depend on your individual circumstances. You may want to consider factors such as your risk tolerance, time horizon, tax situation, and personal preferences. You may also want to diversify your savings across different options to reduce your exposure to market fluctuations and maximize your returns.
Saving for retirement can be a complex and challenging task. You may have questions or doubts about how much to save, where to save, and how to save. You may also face obstacles or difficulties along the way, such as changes in your income, expenses, or goals. That’s why it can be helpful to seek financial advice from Echo Financial Advisors Ltd. (Qualified and trustworthy professionals). A financial advisor can help you:
To find a good financial advisor, you may want to:
Inflation is the general increase in the prices of goods and services over time. Inflation reduces the purchasing power of money, meaning that you can buy less with the same amount of money. Inflation can affect your retirement planning in several ways, such as:
Therefore, it is important to take inflation into account when planning for your retirement. You may want to:
Inflation is not a new factor to consider in your retirement planning, but it has become a lot more important, as it has risen to 7.3% for the twelve months ended 30th June 2022, which is the highest rate since 1990. Inflation can have significant impacts on your retirement income and expenses, so it is wise to plan ahead.
New Zealand superannuation (NZ Super) is a government pension scheme that pays a fixed amount to eligible retirees. NZ Super is designed to provide a basic income for retirees and supplement their other sources of income, such as savings, investments, or work.
You may be able to get NZ Super payments if you are:
There are some exceptions and variations to these criteria, such as if you have lived or worked in certain countries that have social security agreements with New Zealand, or if you are living in the Cook Islands, Niue, or Tokelau.
You need to apply for NZ Super. You do not automatically get it once you turn 65. You can apply up to 12 weeks before your 65th birthday.
The amount of NZ Super you can get depends on your marital status, living situation, and income. The rates are adjusted each year based on the Consumers Price Index (CPI), which measures the average change in prices of a basket of goods and services.
As of 1 April 2022, the net weekly rates of NZ Super (after tax) are:
You may also be eligible for extra financial help, such as the Accommodation Supplement, Disability Allowance, or Winter Energy Payment.
You can still get NZ Super if you work or travel, but there may be some effects on your payments.
If you work, you can earn any amount of income without affecting your NZ Super payments. However, your income may affect your tax rate and any extra financial help you receive.
If you travel overseas temporarily, you can still get NZ Super for up to 26 weeks in most cases. However, your payments may be affected by the length of your absence, the country you visit, and any overseas pension or benefit you receive.
If you move overseas permanently, you may be able to get NZ Super in some cases. However, your payments may be affected by the country you move to, any overseas pension or benefit you receive, and any social security agreement between New Zealand and that country.
NZ Superannuation (NZ Super) is an important benefit designed to support our beloved seniors aged 65 and older. It aims to provide a basic standard of living, but it's crucial to recognize that relying solely on NZ Super may not cover all your expenses or fulfill your retirement dreams.
Let's explore some of the potential pitfalls of relying solely on NZ Super:
Firstly, housing costs can be a significant concern, particularly if you're renting or have a mortgage. Depending solely on NZ Super may not provide enough income to meet these expenses.
Additionally, unexpected costs like medical bills, home repairs, or car maintenance can catch you off guard. Without additional income sources, managing these expenses can become challenging.
Retirement is a time to savor life's pleasures, including hobbies, travel, entertainment, and the joy of giving gifts. Depending solely on NZ Super may limit your ability to enjoy these experiences to the fullest.
Moreover, relying solely on NZ Super might make it difficult to leave an inheritance for your loved ones or offer them financial support when they need it.
It's important to note that the NZ Super eligibility criteria, payment rates, and tax rules are subject to change. Relying exclusively on NZ Super leaves you vulnerable to any future alterations that may impact your income.
Considering these factors, it is advisable to explore additional income sources in retirement. Building savings, investing wisely, participating in KiwiSaver, considering annuities, or engaging in part-time work can provide the financial security and flexibility needed to achieve your retirement goals.
Remember, planning for retirement is a personal journey, and it's crucial to make choices that align with your aspirations and circumstances.
For more information about NZ Super, visit:
Retirement planning is an important and personal process that requires careful consideration of your goals, circumstances, and options. There is no one-size-fits-all answer to how much money you need to save for retirement in NZ, as it depends on the type of lifestyle you want, your age, income, expenses, and other factors.
However, there are some tools and guidelines that can help you estimate how much you need to save and how to save effectively. You may also want to seek financial advice from a qualified and trustworthy professional who can help you create and manage your retirement plan.
By starting to save early and making smart financial decisions, you can ensure that you have a comfortable and enjoyable retirement in NZ.