As a country, we’re talking more and more about how much money we’ll need to have saved by the time we retire if we want the comfortable lifestyle many of us aspire to. It’s a valuable conversation, particularly in exposing younger generations to the importance of adopting a savings mentality, which will benefit them tremendously over the long term.

How much is enough?

Every year, Massey University’s Financial Education Centre releases an updated set of Retirement Expenditure Guidelines (REGs), designed to give Kiwis saving for retirement an idea of how much money they might need to live a particular lifestyle post-work.

Given the soaring costs of living over the last year or two, you probably won’t be surprised to learn that retirement spending has increased by between 3.7% and 6.2% since last year, depending on whether you live in a one or two-person household and in a province or a city. It also confirms what most of us already know: NZ Superannuation is simply not enough.

REGs: Difference between spending and current rates of NZ Super

Calculate what you could draw in retirement.

Remember, they’re just a guide

While well-meaning and certainly valuable to those still earning, retirement spending data like this can be daunting if you’ve already retired or aren’t far away from it and are unlikely to be adding much more to your savings. That’s why it’s so important to remember that they’re just guidelines. They don’t reflect the enormous variation in individual circumstances and lifestyle goals.

In short, some people will find they get by spending less, while others will have plans that cost more. And most people won’t spend at the same rate throughout their retirement years, often spending more in the first ten years or so when they’re more active, with expenses falling in later years.

Behind the numbers

It’s also worth noting how the amounts are calculated. These REGs are based on the Household Expenditure Survey (HES) conducted every three years by Statistics NZ. The survey collates spending information from around 5,500 households around the country over a one-week period, so it might not always represent a typical week for all respondents.

The REGs use spending data from retirees only. On the years that Statistics NZ doesn’t conduct the survey, the REGs are simply adjusted to reflect inflation. Due to covid-related disruptions, the last HES was done in 2018/19 so the above retirement spending guidelines have only been inflation adjusted since then.