𝐑𝐞𝐭𝐢𝐫𝐞𝐦𝐞𝐧𝐭 𝐑𝐞𝐚𝐥𝐢𝐭𝐲 𝐂𝐡𝐞𝐜𝐤: It’s Not Just About What You’re Retiring From—ButWhat You’re Retiring To
- dom0898
- Feb 13
- 4 min read
Updated: Feb 18
For many Kiwis, the transition to retirement is one of life’s biggest financial unknowns. It’s a shift
from working life to the next chapter—but the real question isn’t just what we’re retiring from, but
rather what we’re retiring to.
The 2024 NZ Retirement Expenditure Guidelines provide a reality check:
NZ Superannuation alone is not enough to fund the lifestyle most retirees hope for.
Household expenses continue to rise, driven by housing, utilities, transport, and insurance.
The fear of running out (FORO) leads some retirees to underspend, sacrificing quality of life.
Many Kiwis haven’t calculated how long they’ll live, making financial planning tricky.
So, what’s the real picture? And more importantly, what should we be doing differently?
The Superannuation Shortfall: How Much Do You Actually Need?
A single retiree in a metro area spends around $688 per week on a "no frills" lifestyle, but NZ Super
provides just $519—a shortfall of nearly $170 per week. Those wanting a more comfortable
retirement spend closer to $769 per week, meaning a much bigger gap to fill.
For a couple in a metro area, the "no frills" budget is $910 per week, but NZ Super only provides
$799. If they want a lifestyle with choices, that jumps to $1,740 per week.
This raises a critical question: if Super isn’t enough, where is the rest of the money coming from?
KiwiSaver is now a fundamental part of most retirement plans, but the question remains—will it be
enough?
Currently, the average KiwiSaver balance sits at around $28,800. While this is a solid foundation,
it’s nowhere near enough to bridge the gap left by NZ Super. Estimates suggest that a comfortable
retirement requires savings of $271,000 or more for a single person and over $1 million for some
two-person households.
The reality? Too many Kiwis are contributing only the minimum and aren’t making full use of
employer contributions or government incentives. If you’re relying on KiwiSaver to fund your
retirement, now’s the time to reassess:
✅ Are you contributing enough to meet your retirement goals?
✅ Would a higher-risk fund (e.g., growth vs. conservative) provide better long-term returns?
✅ Do you have other investments to supplement KiwiSaver?
KiwiSaver alone isn’t a full retirement plan—it’s just one piece of the puzzle.
Property: The Kiwi Dream or a Distant Hope?
For decades, property investment has been a go-to strategy for building wealth. Owning a home
has traditionally been the first step, followed by rental properties for passive income.
But is this still realistic?
With soaring house prices and tighter lending restrictions, many Kiwis are now struggling to
buy their first home—let alone invest in rental properties. This shift raises an important question:
If property has always been seen as the backbone of retirement wealth, what happens to those
locked out of the market?
For those who do own property, the challenge becomes turning that asset into cash flow. A
mortgage-free home is great for security, but it doesn’t pay the bills. That’s why many retirees
consider:
Downsizing to free up capital.
Equity release schemes (though these need careful financial advice).
Turning a home into a rental while moving into a smaller property.
For those who can’t get on the property ladder, it’s time to rethink alternative asset classes beyond
home ownership.
Many small business owners treat their business as their retirement plan—but without an exit
strategy, this can backfire. A business only holds real value in retirement if it can be sold or
generate passive income.
Yet, many business owners fail to plan for succession or sale. This means:
Their business may not be sellable when they need to retire.
They might have no clear transition plan, leading to stress and financial shortfalls.
Their wealth is tied up in an illiquid asset, rather than diversified investments.
A well-run business can be an incredible retirement asset—but only with the right planning. That
includes structuring the business for sale, building systems that don’t rely on the owner, and
having a clear transition strategy.
The Cost of Underestimating Life Expectancy
One of the most underrated risks in retirement planning is longevity. If you plan to live to 85 but
reach 95, what happens to your finances in those extra 10 years?
The fear of running out (FORO) often leads retirees to over-save and underspend, meaning they
sacrifice their lifestyle unnecessarily. On the flip side, not having a clear withdrawal strategy
could leave you financially vulnerable in your later years.
For couples, this becomes even more complex. It’s not just about individual life expectancy—it’s about
ensuring the surviving partner has enough financial security to maintain their standard of living.
The key to retirement security isn’t just having assets—it’s having a strategy to convert those
assets into reliable income streams.
If retirement planning feels overwhelming, the best approach is to break it into actionable steps.
Here’s where to start:
Assess Your Current Financial Position – Understand your assets, liabilities, and projected
retirement income.
Engage with Financial Advisers – Seek professional guidance to develop a comprehensive
retirement strategy tailored to your circumstances.
Maximise KiwiSaver Contributions – Consider increasing your contribution rate to enhance
your retirement savings.
Explore Property Opportunities Prudently – If considering property investment, conduct
thorough market research and assess your financial capacity.
Plan for Business Succession – If you're a business owner, develop a clear exit or succession
plan to realise the value of your enterprise.
The reality is this: The first of Gen X will hit retirement from 2030, and Millennials aren’t far
behind. The question isn’t whether retirement is coming—it’s whether we’ll be financially ready for
it.
NZ Super is a safety net, not a strategy. If you’re serious about financial security in later life, now’s
the time to take action.
What’s your retirement plan? Are you relying on property, business, KiwiSaver—or a mix of
all three? Let’s start the conversation.