When it comes time to retire, we all want to land in a position where we can be comfortable. Where we can cover our costs, indulge in our hobbies, and get around to going on those crazy adventures hadn’t had a chance to get around to.
If that’s where you’d like to end up, are you doing enough to get there? Or are you trusting that New Zealand Superannuation and your KiwiSaver balance will get you through?
While for some Kiwis that may be OK and could cover their lifestyle costs, most Kiwis will need to be a little more ambitious to ensure they’ll have enough to pay for their desired retirement lifestyle.
Because NZ Super and KiwiSaver won’t cover as much as you think they will
If you’re just putting the minimum into your KiwiSaver and trusting that NZ Super is going to cover the rest, it may pay to prepare yourself for a retirement that looks a lot like your university dorm days.
Because, at the current rate, NZ Super and KiwiSaver aren’t going to afford you much more.
When looking at figures released by the Massey University New Zealand Retirement Expenditure Guidelines in 2022 – NZ super alone doesn’t even cover a no-frills budget in the provinces for a couple. And the extra amount you’ll get from your KiwiSaver investment, won’t make much of a difference. Current data shows that a typical balance for those turning 65 in ~15 years is $124,400. That’s just under $100 a week if you’re looking to cover 25 years of retirement, or ~$200 for a couple*
Based on the current super income of $763/wk, that comes to a grand total of ~$963 per week – per couple.
Even if you’re thinking, “I can live off that, that doesn’t look that bad” or “I’ve got other investments that are on track to fill the gap” there are other reasons why it’s worth being ambitious with your retirement savings.
Thinking you’ll be OK for retirement is predicated on things turning out as expected.
The problem with thinking you’re going to be OK when it comes to retirement is that it often doesn’t leave a lot of wriggle room. It’s also based on a few assumptions.
It’s assuming you:
- Will be able to continue working until your desired retirement age
- Won’t experience a loss of income
- Will be able to continue contributing towards your retirement savings at the same rate until you retire
- Won’t face any unexpected events or costs that impact your ability to earn or save before you retire
- Won’t experience unexpected events or costs that eats into your savings faster than intended once you retire
But things rarely go as planned. Being more ambitious and growing additional wealth will help provide a financial buffer so that if you do experience a drop in income or unexpected extra costs these are less likely to derail your retirement plan or cause you to make significant sacrifices to how you live pre- and post-retirement.
Plus, a bigger retirement nest egg = more opportunities
Being more ambitious and aiming to have more than what you think you need gives you more options for where and how you live in your retirement.
You’ll not only have the security of knowing you’re prepared for the unplanned and unexpected, but you’re also in a position to take advantage of opportunities that might come your way. Want to move to sunnier climes? You can. Want to go on that trip of a lifetime you hadn’t even considered? You can. Want to help your kids into their first home? You can!
Being that little bit more ambitious means you’re in a much better position to take advantage of those opportunities when they come your way.
Being more ambitious isn’t bad
We know Kiwis can be a bit funny about money. We don’t like talking about it, and we’re not super comfortable with people who are financially successful. With that in mind, it’s understandable that you may feel a little uncomfortable actively attempting to improve your financial situation.
But providing for your own retirement and ensuring you can live the lifestyle you want and don’t have to be a burden on others is a good thing and should be celebrated.
So, don’t think you have to settle for an OK retirement. Look for ways you can become more ambitious with your savings and investments so you can live the lifestyle you didn’t even know you wanted when you retire.
Want more? enable.me founder and financial expert, Hannah McQueen, will be hosting a webinar on ‘Why invest when you’re ‘OK’ for retirement on Tuesday the 16th of May at 7:30 pm. You can register for the session and submit your questions to be answered live here.
Or, if you’re interested to find out what options there are available to you to be more ambitious when it comes to your retirement planning now, book a consultation to chat with an enable.me financial adviser about the opportunities for you to grow your wealth today. This consultation is valued at $400 but will cost you just $249. Click here to get started.
This blog post is for informational purposes only and does not constitute individual financial advice. If you’re interested in receiving financial advice, you can book a consultation with an enable.me coach. Costs apply.
*based on the assumption that you both have a KiwiSaver savings at the ‘typical’ amount. Actual figure may vary based on your actual KiwiSaver balance at age 65. Weekly figure is based on your KiwiSaver balance covering 25 years of retirement, and doesn’t take into account potential further growth in the value of the fund.