As people get older, the subject of retirement, superannuation and comfort are on the forefront of people’s minds. Everyone wants to be comfortable in retirement and being able to live comfortably without worrying about money is the ultimate goal of many retirees. A common question that comes to mind when planning this phase of life is “How much money do I need to retire comfortably?” There is no one definitive answer to this question as comfort levels varies from person to person and also changes over time. However, most agree that retirement is something worth planning no matter how close of far away it is. It’s important to think about the kind of retirement you want and how much money is needed to support this.
Let’s Talk NZ Superannuation
NZ Superannuation is a retirement income provided by the government to eligible people. The amount of NZ Superannuation you may get when you’ve reached qualifying age 65 or over will depend on whether you’re single or living as part as a couple. A single person living alone can currently expect to get $465 a week after tax a year and a couple can expect $700 a week from NZ Super. Some would argue that this amount is not enough to retire comfortably on, especially if you live in an expensive city such as Auckland. A report published by Fin-Ed Centre in 2019 outlines that most retirees would spend over the super rates being paid and it is especially true if you live close to the inner cities of Auckland, Wellington and Christchurch. Both single and couples on the NZ Super can spend 28 percent over the rate and that is on a basic lifestyle. Knowing this, it is safe to say that for many people, relying on NZ Super alone will not be enough to retire comfortably.
How Much Should I Save?
The amount of money you will need to retire comfortably depends on a variety of factors such as your current age, when you plan on retiring, your current lifestyle and your desired retirement lifestyle. As outlined in the Fin-Ed Centre report in 2021, researchers reported in order to retire comfortably with some luxuries, singles will need to come up with $1028 a week to retire comfortably in the inner city whilst couples will need $1470 a week. Living further away from the city would easily reduce expenditure by twenty to thirty percent.
Retirement Living Costs
The cost of living often goes up as people get older and this needs to be taken into consideration when working out how much money is needed for a comfortable retirement. In order to retire comfortably, we need to make up the shortfall in income and the best way to do this is to have a retirement plan in place and stick to it. Whether it is putting money aside weekly, investing in assets or contributing to your KiwiSaver funds, it is important to realise your retirement goals and start working towards them.