Do you know how much retirement costs?

February 20, 2020

Retirement. It sounds wonderful, especially when you’re about to kick back and enjoy it. Trips overseas, adventures with your partner you’ve only talked about, taking those hobby courses you’ve always dreamed you would!

Retirement and New Zealand Superannuation – the facts

It’s not going to take long, after the office farewell party, before the cold reality of the cost of retirement sinks in. Retirement is expensive, and that’s because what you want and what you need to fund that vision, are two vastly different things. Not to mention the fact you need to calculate in inflation - rising medical costs and the cost of living. If you’re a woman, unfortunately you are likely to have earned less than your male counterparts so you have to save more from less income and you will, more than likely, live longer as well.

The one thing you don’t want to do is wake up, four years into retirement, and realise there’s not just a gap, but a great yawning hole between your retirement aspirations and what your retirement funds combined with New Zealand Superannuation will provide. Your financial planning needs to be put in place correctly today.

How much will I need to retire comfortably?

Each year, Westpac Massey Fin-Ed Centre calculates what retirees in one and two-person households in both metropolitan and rural areas are currently spending to enjoy a basic, necessities-only retirement, or one with a decent allowance to make lifestyle choices. According to their latest Retirement Expenditure Guidelines, to fund what they call a ‘choices’ retirement, retired couples in metropolitan areas will need to have $785,000, while rural couples would need to save $492,000.

Three things you can do right now to bridge the gap between your retirement and New Zealand Superannuation

The good news is that there are a few things you can do to be better prepared for retirement.

  1. Remember that you can never start early enough when it comes to saving towards your retirement. If you can, start saving more immediately.
  2. Calculate what you’ll need, don’t guesstimate. Whatever your guestimate is… it will be wrong! If you’d like to read the Westpac Massey Fin-Ed Centre’s latest Retirement Expenditure Guidelines (2018), click here.Our Britannia Retirement Guide comes equipped with a convenient retirement calculator which you can use to help gauge the amount of savings you need to be accumulating to retire in comfort. Simply fill in the form here and we'll send you a link to download your free Retirement Planning Guide.
  3. Get expert advice as to how much you should be saving. Our financial advisers at Britannia Financial can assist you with a professional calculation, as well as on-going advice as to the state of your retirement savings and how to stay on top of them.

Another top tip for your retirement fund

Circumstances have a habit of changing, sometimes for the better. Sometimes, not. Either way, the best thing you can do is contact your Britannia adviser to make sure your retirement plan is still suitable, or whether it could be adjusted to your benefit.

Retirement income gap graphs

Retirement comes quicker than you think. Talk to us today!