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A frills or no frills retirement? The latest Retirement Expenditure Guidelines released.


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Achieving expectations and aspirations for retirement will be very challenging for the majority of New Zealanders unless they prepare and plan.

That’s one of the main conclusions of the latest Retirement Expenditure Guidelines.

The guidelines have been produced by Massey’s NZ Fin-Ed Centre and are sponsored by Consilium and Financial Advice New Zealand.

They say the average retired household continues to spend in excess of NZ Super, highlighting the importance of preparing for retirement. They suggest most Kiwis will need to make provision for supplementary retirement income, in addition to what NZ Super can provide.

They calculate what retirees currently spend to maintain either a ‘no frills’ retirement, or a more fulfilling ‘choices’ lifestyle that includes some luxuries. Costs are calculated for one and two-person households in metropolitan and provincial areas.

A two-person household in the main cities in 2021 would need to have saved $809,000 to fund a ‘choices’ lifestyle, while a couple living in the provinces would need to have saved $511,000. The lump sums required for a ‘choices’ lifestyle for a one-person household are $600,000 and $688,000 for metropolitan and provincial areas respectively.

Only two-person provincial households living a ‘no frills’ lifestyle come close to being funded by NZ Super, though they would still need savings of $75,000. A metropolitan two-person household with a ‘no frills’ lifestyle would require $195,000 savings at retirement in addition to NZ Super.

The guidelines say the key inflationary drivers for superannuants for the 12 months ending 30 June this year were transport, and housing and household utilities.

About the Retirement Expenditure Guidelines

NZ Fin-Ed Centre, or New Zealand Financial Education and Research Centre was set up in 2011 as a joint initiative with Westpac New Zealand and Massey University that aims to improve the financial wellbeing of New Zealanders. The report’s findings, are based on figures from Statistics New Zealand’s triennial Household Economic Survey, adjusted for the effect of inflation. It is important to note the guidelines do not represent recommended levels of expenditure, but reflect actual levels of expenditure by retired households.

Read the full report here.