Retiring often feels like a far-off concept. But as we know, time flies, and the longer we kick the retirement can down the road, the less likely we are to enjoy a comfortable retirement.
In an ideal world, we’d all have enough money to retire comfortably, without having to work into our seventies and eighties.
So, how much money do you need to fund your retirement in New Zealand?
On a modest budget, an average retired couple will need $849.82 per week to cover weekly expenses, rates, insurance and other bills.
While NZ Super and KiwiSaver provides retirees some financial support, having additional savings and investments will give you more flexibility and choices in your golden years.
Savings
Maintaining your current lifestyle when you retire is achievable if you start saving for your retirement early.
As a general rule of thumb, our twenties are all about building good savings habits, while the focus in our thirties should be about earning more, while spending less. From our 40s onwards, the focus should be on building a nest egg until you reach retirement age.
How much you can put away depends on a multitude of factors be it age, stage, and lifestyle. Things like dependents, property ownership and large expenses can make saving for retirement harder and should be factored into any savings plan.
While there’s no set amount for how much you should have stashed away at any given age for your retirement savings goal, the latest from Stats NZ on median net worth by age in New Zealand may serve as a helpful guide:
| Age group | Median net worth $ |
| 15-24 | 3,330 |
| 25-34 | 34,500 |
| 35-44 | 116,700 |
| 45-54 | 228,600 |
| 55-64 | 363,000 |
| 65-74 | 433,100 |
| 75+ | 411,900 |
Pension
No matter your savings or your situation, all New Zealand citizens are entitled to their NZ Superannuation.
NZ superannuation is a universal payment for New Zealanders aged 65 and over, also called the pension.
While NZ Super is not means-tested, rates will depend on eligibility, tax code and whether you live overseas.
The current pension rate for an eligible couple with an M tax code is $1,606.96 paid fortnightly. If you or your partner earn other income as well as NZ Super, for example, your tax code, and therefore your fortnightly payments, will differ.
KiwiSaver
KiwiSaver is a voluntary, work-based savings scheme run by independent providers, designed to help New Zealanders save money during their lifetime for their retirement.
The flexible contribution rates (3%, 4%, 6%, 8%, 10%) and mandatory employee contributions means that it will be easier to reach your savings goals by the time retirement rolls around.
KiwiSaver is a popular method to accumulate savings throughout your working years without having to do much active investing. Your KiwiSaver funds are managed by a registered provider, meaning all you need to do is select the fund that best reflects your investment profile (i.e. conservative or high growth), and the rest is taken care of.
According to Te Ara Ahunga Ora Retirement Commission, the average retired male in New Zealand currently has $60,000 in their KiwiSaver, females are sitting slightly lower at $45,000.
These figures, plus NZ Super, are unlikely to cover necessary expenditure throughout retirement, let alone any luxuries. To afford a comfortable retirement, retirees may look into other ways to generate income.
Generating additional income through investing
This could come from a variety of sources. You may own a property which generates rental income, for example, or perhaps you own shares in a company and receive dividends.
Not everyone has these additional income streams, which means it could be worth exploring investing your money into short-term investments that generate a reliable and consistent source of income.
Where you invest your money, and how much you should invest, depends on several factors including your personal risk appetite and portfolio, whether you want to be actively involved in your investment or relatively hands off, and how much cash you have available to invest.
For further information on how to determine where to invest your hard-earned money, check out our Investing in your Retirement guide.
Peer to peer investing
Short-to-medium term property investments are a great way to grow your retirement fund, build a part of your diversified portfolio and generate regular income.
Peer-to-peer lenders like Southern Cross Partners allow you to invest in first mortgage secured loans of one to three years max, all while managing your investments for you.
Here are some of the reasons you might consider peer-to-peer property investing to fund your retirement:
- Tangible Asset: unlike stocks, real estate is a physical asset securing the loan against it. This tangibility can be reassuring for some investors.
- Secure investments: when your investment is secured by property, there are legal options available such as selling the property to recoup funds, should the loan default.
- Stable, passive income: peer-to-peer lenders typically manage your investments for you and conduct rigorous due diligence to ensure those investments are as low risk as possible.
Retiring comfortably at 65 in New Zealand requires proactive financial planning. While NZ Super offers essential support, additional savings and investments are crucial for maintaining your desired lifestyle. Starting early, consistently contributing to KiwiSaver, and exploring diverse investment options for regular income streams will go a long way to helping you achieve your retirement goals.
For more detailed information and to explore your investment opportunities in this space, you can get in touch to speak to a member of our team.
Southern Cross Partners is licensed to provide peer to peer lender lending services under the Financial Markets Conduct Act 2013. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. We recommend you speak with a financial adviser before making any investment decisions
