Retirement at 65: Is It Still Realistic?

The idea of retiring at 65 is deeply ingrained. It is when NZ Super starts and when many people expect to stop working. But is 65 still the right target?

The Origins Of 65

The age of 65 for pensions dates back to Bismarck's Germany in the 1880s. Life expectancy then was around 45 years, so most people never reached pension age. New Zealand's superannuation has varied over time. The age was 60 until 1992, then gradually increased to 65 by 2001.

Life Expectancy Has Changed

A New Zealand man turning 65 today can expect to live to about 84. A woman can expect to reach 87. This means 20+ years of retirement to fund, far more than pension systems were originally designed for.

Financial Realities

Many 65-year-olds have not saved enough for a 20-30 year retirement. Average KiwiSaver balances at 65 are currently $50,000-$80,000. To maintain a comfortable lifestyle, most people need $300,000-$500,000 in savings beyond NZ Super. The maths often does not work at 65.

Health And Ability To Work

Not everyone can work until 65, let alone beyond. Physical jobs become harder. Health conditions develop. Employers sometimes show bias against older workers. On the other hand, many 65-year-olds are fit, capable, and want to continue working if suitable opportunities exist.

The Case For Working Longer

Working longer brings significant financial benefits. You get more years of saving and compound growth, fewer years of drawing down savings, continued employer KiwiSaver contributions, and a stronger overall position. While NZ Super does not reward delayed claims like some other countries, the additional savings years make a substantial difference.

Beyond finances, continued work provides personal benefits including social connections and purpose, mental stimulation, and the opportunity for a gradual transition rather than a sudden stop. Working to 67 or 70 can dramatically improve retirement finances. Each additional year of work could add $50,000+ to your retirement position.

The Case For Retiring Earlier

There are valid reasons to consider earlier retirement. From a health perspective, you may want to enjoy active years while you can, accommodate health conditions that make work difficult, or create time for exercise and wellness.

Life enjoyment matters too. Travelling while you are mobile, pursuing hobbies and interests, and spending time with grandchildren are easier when you have the energy and health for them.

Career factors also play a role. Some industries push older workers out, technology changes make some skills obsolete, and burnout from demanding careers can make continued work unsustainable.

Phased Retirement

Rather than a sudden stop, many people are choosing gradual transitions. This might involve reducing to part-time work, moving to less demanding roles, doing consulting or contract work, or starting small businesses. This approach provides income while easing the transition. It also maintains purpose and social connections.

Making 65 Work

If you want to retire at 65, you need to maximise KiwiSaver contributions throughout your working life, pay off your mortgage before retirement, build additional savings outside KiwiSaver, reduce expenses and simplify your lifestyle, and consider downsizing to free up capital.

Starting early makes all the difference. A 25-year-old saving $50 extra per week will have significantly more at 65 than a 50-year-old trying to catch up.

When 65 Is Not Realistic

Be honest with yourself. If your KiwiSaver balance is below $100,000 at 60, you may need to work longer. If you are still paying a mortgage, 65 may be too early. If you have debt, focus on elimination before retirement. There is no shame in working beyond 65. Many people find continued work rewarding.

Planning For Flexibility

The best approach is building options. Save more than you think you need, develop skills that remain valuable, maintain health to keep working ability, build passive income streams, and keep housing costs manageable. Then you can choose when to retire based on circumstances rather than being forced into a decision.

The Bigger Picture

Retirement age is personal. Some people love their work and never want to stop. Others cannot wait to finish. Focus on building the financial position that gives you choices. Whether that is 60, 65, or 70, you want the decision to be yours.