How Much Do You Need to Retire Comfortably in NZ?

How much money do you need to retire comfortably? It is the question that keeps financial planners in business and keeps the rest of us awake at night. The honest answer is that it depends, but there are useful frameworks for thinking about your retirement needs.

The Official Benchmarks

The Retirement Commission (Te Ara Ahunga Ora) publishes retirement expenditure guidelines that provide a starting point for planning. Their figures, updated periodically, estimate what different lifestyles cost in retirement.

For a single person living in a metropolitan area, a "no frills" retirement covering basic needs costs around $31,000-35,000 per year. A "choices" lifestyle with more flexibility runs around $45,000-50,000. A "comfortable" retirement with regular travel and leisure activities requires $55,000-65,000 or more.

For couples, these figures increase but not proportionally since many costs are shared. A comfortable retirement for two might require $70,000-90,000 annually depending on location and lifestyle expectations.

These are guidelines, not rules. Your actual needs depend on where you live, whether you own your home, your health, and what you want to do with your retirement years.

The Role of NZ Super

New Zealand Superannuation provides a foundation for retirement income. As of 2025-2026, NZ Super pays around $26,000-28,000 per year for a single person living alone, or around $40,000-42,000 combined for a couple. These figures are adjusted regularly with inflation.

NZ Super is not means-tested, so you receive it regardless of other income or assets. This universality makes retirement planning somewhat simpler than in countries where government pensions phase out as wealth increases.

For many New Zealanders, NZ Super covers basic living expenses. The gap between NZ Super and your desired lifestyle is what your savings need to fund.

Calculating Your Number

A common rule of thumb suggests you need around 10-12 times your desired annual income saved at retirement. If you want $60,000 per year and NZ Super provides $28,000, you need your savings to generate $32,000 annually. At a 4% safe withdrawal rate (a commonly used planning assumption), that requires around $800,000 in savings.

This is a rough calculation with many variables. The 4% rule originated from US research and may not perfectly apply to New Zealand conditions. Your actual withdrawal rate depends on your investment mix, market conditions, how long you expect to live, and whether you want to leave an inheritance.

A more sophisticated approach considers your actual expected expenses, inflation, potential healthcare costs, and the likelihood of living longer than average. Many people underestimate their lifespan when planning, running the risk of outliving their savings.

The Housing Factor

Whether you own your home mortgage-free makes an enormous difference to retirement calculations. The benchmark figures above generally assume home ownership without mortgage payments.

If you still have a mortgage at retirement, your income needs increase significantly. If you are renting, you need to account for ongoing housing costs that could consume a large portion of your budget, especially if rents continue rising.

This is why paying off your mortgage before retirement is often prioritised over other financial goals. A paid-off home reduces your essential expenses and provides options like downsizing or accessing equity if needed later.

KiwiSaver and Other Savings

For many New Zealanders, KiwiSaver is their primary retirement savings vehicle beyond their home. The combination of employer contributions, government contributions, and tax advantages makes it an effective tool for building retirement wealth.

However, KiwiSaver alone may not be enough. Someone contributing 3% of a median salary throughout their working life might accumulate $300,000-400,000 by age 65, depending on investment returns. That is a meaningful sum but may fall short of funding a comfortable retirement over 25-30 years.

Supplementing KiwiSaver with other savings, investments, or rental property income can help close the gap. The earlier you start, the more compound interest works in your favour.

When to Start Worrying

Different life stages call for different approaches to retirement planning.

In your 20s and 30s, the focus should be on building good habits. Contribute to KiwiSaver at least at the level that captures full employer matching. Build an emergency fund. Start thinking about home ownership if that aligns with your goals.

In your 40s, retirement planning becomes more urgent. This is the time to calculate whether you are on track and adjust if needed. Increasing KiwiSaver contributions, paying down debt, and considering additional investments can help close gaps.

In your 50s and 60s, planning becomes concrete. You should have a clear picture of your expected retirement income and expenses. Decisions about when to retire, whether to work part-time, and how to structure your savings become immediate rather than theoretical.

The Part-Time Option

Full retirement at 65 is not the only model. Many people transition gradually, reducing work hours rather than stopping abruptly. This approach has financial benefits (continued income and delayed drawdown of savings) and often psychological benefits too.

If your retirement savings fall short of ideal, extending your working life even a few years can make a significant difference. Each year of continued work is a year of additional savings plus a year less that your retirement funds need to last.

Planning for Healthcare

Healthcare costs tend to increase with age. While New Zealand's public health system covers many costs, there are still expenses for medications, dental care, private treatment, and eventually aged care that can consume retirement savings.

Long-term care is particularly challenging to plan for. Rest home care can cost $1,500-2,500 per week or more. While government subsidies are available for those with limited assets, the thresholds are low. Many people end up paying significant sums for aged care before qualifying for assistance.

This uncertainty argues for building a buffer beyond your expected needs. Having more than you think you need provides protection against healthcare costs, market downturns, or simply living longer than expected.

Getting Professional Advice

Retirement planning involves complex decisions about investment allocation, tax efficiency, insurance, and estate planning. While general guidelines help, personalised advice from a qualified financial adviser can identify opportunities and risks specific to your situation.

This is particularly valuable as you approach retirement and decisions become consequential. The difference between a good and poor withdrawal strategy, for example, can amount to hundreds of thousands of dollars over a long retirement.

Start Planning Now

There is no single number that guarantees a comfortable retirement. But understanding the benchmarks, calculating your gap, and taking action to close it puts you in a much stronger position than hoping for the best.

Start with NZ Super as your foundation. Calculate what additional income you need for your desired lifestyle. Work backwards to determine what savings are required to generate that income. Then assess whether you are on track and adjust if needed.

The best time to start planning for retirement was years ago. The second best time is now.