Everyone’s lifestyle in retirement will be different – so how much do you need to save to enjoy the life you want once you finish working?
You can use Sorted’s KiwiSaver calculator to work out how much it will have grown by the time you retire, then use that result to fill out the Sorted retirement calculator. You’ll need to tell the calculator how much income you want, which can be hard to figure out. Massey University has done extensive research into how much Kiwis spend in retirement. The latest guidelines say that for a ‘choices’ retirement with a few holidays and steak dinners, you’ll need around $1000 a week for a one-person household. For a two-person household it’s around $1150 in a provincial area or $1420 in the cities.
“Think about what kind of lifestyle you want,” recommends Michael Cave. “What will you do in retirement? Travelling is a lot more expensive than gardening. Be realistic about how and where you want to live.”
Michael says getting some external input on your plans can be useful: “Sometimes you need to hear some unvarnished honesty. Do you really need four bedrooms when you’re retired? It’s often cheaper to put your relatives up in a hotel when they come to stay than paying for a much larger house – and you have to clean and maintain the big house. Get some realistic feedback!”
You can survive on superannuation alone, he adds, but you’ll have more choices when you have a bit more money. And once you have an idea of how much you’ll need, you can work backwards and make smarter decisions about your current investments.
“Do some numbers – we can help – and give yourself some clarity around what your financial picture will look like,” says Michael. “Then you can think about whether to take some more risk now, hold onto your investment project or pay down debt. And of course, you don’t want to burn yourself out and never get to enjoy all that money you’ve saved.”