02/11/2025 · Last update: 02/11/2025

• Budget Planning

How Much Do I Need to Retire in New Zealand?

“How much do I need for retirement?” is a common question among Kiwis.

How much is actually enough? The answer isn’t as simple as “save heaps and hope for the best.”

Your retirement income target depends on how you want to live, how long you’ll be retired, and whether you’re happy spending every dollar or want to leave something behind. Get it wrong, and you’re either sacrificing too much now or facing financial stress later.

This guide breaks down exactly what you need to retire comfortably in New Zealand. We’ll look at realistic budgets, calculate your personal target, and show you what different retirement lifestyles actually cost.

Your Age and How it Affects How Much You Need to Retire

Before you can figure out how much to save, you need to answer a fundamental question: what’s the length of your retirement going to be? It’s not the cheeriest topic, but it’s essential for planning. Will you retire at age 65 or later? Depleting your funds at age 75 or your 10th year in retirement hits differently than doing so at 85.

Retirement Costs Based on How Long You’ll Retire

In New Zealand, life expectancy keeps climbing. Right now, the average sits just above 80 for both men and women. But here’s the kicker—reaching retirement age means your numbers get better. Current figures show that a Kiwi woman who was born in 1962 and celebrates her 65th birthday could live another 23 to 25 years.

Your personal timeline depends on more than just statistics, though. Lifestyle choices, genetics, and plain old luck all play a role. Did your family members reach their 90s? Do you exercise regularly and avoid smoking? These factors suggest you’ll likely outlive the averages. The Stats NZ calculator weighs these personal details alongside historical trends to project your individual lifespan.

Living longer sounds great. But it also means stretching your savings across more years than previous generations. This is why understanding your probable retirement duration matters—it’s the foundation for every other financial decision you’ll make.

What a Basic Retirement Actually Costs

Let’s talk numbers. According to the Massey University New Zealand Retirement Expenditure Guidelines published in 2023, a single person living modestly in a metro area like Auckland, Wellington, or Christchurch needs a basic budget. We’re not talking luxury here, just a decent standard of living without extravagance.

New Zealand Superannuation provides $25,876 per year after tax maximum for a single person. Sounds reasonable, right? Here’s the problem: that modest lifestyle actually requires more. The research reveals an annual gap of about $17,000 during retirement.

Do the math, and you’re looking at needing an additional $355,000 in today’s dollars to bridge that deficit. That’s just to maintain a modest lifestyle, not fancy holidays or regular restaurant dinners. This is why beginning your retirement savings early matters so much. Even small contributions compound over time, making that seemingly massive number much more achievable.

You Need to Save More to Leave a Legacy

Here’s a question that splits people down the middle: do you want to spend every last dollar of your retirement savings, or leave something behind for your kids?

Some investors plan to live entirely off investment returns without ever dipping into the principal amount. They want to build generational wealth, money that gets handed down to children and grandchildren. This approach means leaving your savings intact and only using the income it generates.

Other people take a completely different view. Their goal? Spend the last dollar on their last day. They figure they worked hard for that money, and they’re going to enjoy every cent of it. Whatever your approach, you need to use a retirement calculator to create a financial plan to fit the lifestyle you want.

What This Means for Your Retirement Savings

Your philosophy here dramatically changes how much you need to accumulate. Want to keep your principal untouched? You’ll need significantly more saved up because you’re limited to living off investment earnings alone. That typically means a much larger nest egg is required before you can comfortably retire.

What Kind of Retirement Do You Want?

Not all retirements look the same. Some people are content with simple pleasures, while others want to maintain a more lavish lifestyle. Understanding these different levels helps you figure out which target makes sense for you.

The three levels at a glance:

• Modest Retirement: $50,000-$70,000 annually
• Comfortable Retirement: $80,000-$120,000 annually
• Luxury Retirement: $130,000+ annually

A Modest Approach to Saving for Retirement

This lifestyle runs between $50,000 and $70,000 annually per household. You’ll own your home without a mortgage, take the occasional domestic holiday, and dine out when you feel like it. Healthcare needs get managed through public services. It’s comfortable without being flashy—covering essentials while leaving room for small treats.

What it Takes to Feel Comfortable With Your Retirement Funds

Step up to $80,000-$120,000 per year, and you’re living the retirement most New Zealanders envision. International trips every few years become doable. You’re eating out weekly or fortnightly. Unexpected medical or dental bills get handled from savings without scrambling. This level offers breathing room and flexibility.

Luxury Retirement: The Top Tier

Fewer than one in five retirees reach this bracket at $130,000 or more annually. Here, you’re choosing private healthcare, traveling overseas regularly, and offering substantial support to family members. This lifestyle provides complete financial freedom.

Where Does NZ Super Fit In?

These household income targets already factor in Kiwi Saver. For instance, a couple aiming for that $100,000 comfortable lifestyle (which includes roughly $43,000 from Kiwi Saver) needs to generate around $57,000 from their own savings, less than $2,000 weekly from personal funds. Keep in mind that circumstances like rent, mortgages, or supporting family members shift these numbers.

How Much Do I Need of My Current Income? (AKA the 60% Rule)

Old-school financial advice suggests you’ll need roughly 60% of your current income in retirement. It’s neat and completely outdated for modern New Zealand living. This one-size-fits-all approach ignores how dramatically needs vary based on what you currently earn.

How Much Do I Really Need to Retire Based on My Current Income?

High earners ($100,000+) typically need to replace around 60-65% of income. Work expenses disappear. No more commuting costs, professional wardrobes, or pricey lunches. Mortgages are often paid off, and heavy retirement savings stop coming out of each paycheck.

Middle earners ($50,000-$100,000) require 70-80% replacement. Your work expenses are lower to begin with, so there’s less fat to trim. Your lifestyle stays relatively consistent without major downgrades.

Lower earners (under $50,000) might need 90-100% or even more. There’s simply no excess in the budget to cut. Every dollar already goes toward necessities, and retirement doesn’t magically make life cheaper.

The key takeaway? Forget the generic 60% rule. Your replacement target depends entirely on your current earnings and lifestyle.

The 25x Rule and What It Means for Kiwis

You’ve probably heard about the 4% rule floating around retirement planning circles. The global benchmark says you should accumulate 25 times whatever you spend annually. This lets you withdraw 4% each year without depleting your savings too quickly.

Here’s what that looks like in practice: need an extra $40,000 per year on top of NZ Super? You’re looking at saving $1 million. Sounds straightforward, right?

Not quite. This international guideline needs some serious tweaking for New Zealand’s reality. Our tax system works differently. PAYE rates affect how much you actually take home. NZ Super payments factor into the equation. And inflation, especially the way it’s been climbing recently, changes the math considerably.

Retirement Plan Savings Milestones by Age

Rather than fixating on that final number, it helps to know where you should be at different life stages. These benchmarks assume you’re targeting a comfortable retirement and include everything such as the KiwiSaver and personal investments.

Think of these as annual salary multipliers:

• Hit 40 years old: aim for 1-3 times your yearly salary tucked away
• Reach 50: bump that up to 6 times your annual earnings
• Turn 60: you should be sitting on roughly 10 times your salary
• Arrive at 65: target between 12-15 times what you make annually

These aren’t rigid rules carved in stone. They’re guideposts. Started saving late? You’ll need to be more aggressive. Inherited money or sold a business? You might already be ahead of schedule. The point is having realistic markers to measure your progress against, rather than hoping everything works out when you hit retirement age.

What Your Retirement Budget Actually Buys in New Zealand

Numbers are helpful, but what do they actually mean for your day-to-day life? Let’s break down what you can realistically do at each spending level.

Living on NZ Superannuation or Kiwisaver Alone

Spending: Around $40,000 annually as a couple

Relying entirely on the government pension means watching every dollar. Your account gets roughly $43,000 deposited throughout the year, and that’s your entire income stream. According to Massey University research, this gives you approximately $17 weekly for produce shopping for two people.

Meet David and Helen, both 67. They own their home outright and have no other income sources besides NZ Super. Their weeks involve careful meal planning, occasional coffee dates at home with friends, and free community activities. Big purchases require months of planning. They’re managing, but there’s zero cushion for surprises.

Here’s the reality: most retirees can’t survive comfortably on government payments alone. If this describes your situation, you’ll avoid needing personal savings, but expect significant lifestyle limitations. Some older retirees genuinely prefer this simplicity—they’ve downsized their wants and feel content. But banking on this approach means accepting you can’t help family members financially or handle unexpected costs without stress.

Modest Lifestyle Budget

Spending: $50,000-$70,000 annually as a couple

Jump to this tier and breathing room appears, though you’re still being careful. This budget handles necessities and allows small pleasures, but you’re not splurging on anything.

Take Maria and Tom, who bring in about $58,000 yearly. NZ Super covers a big chunk, and they withdraw roughly $15,000 from their savings annually. They visit their daughter in Tauranga twice yearly by car, enjoy Friday fish and chips most weeks, and maintain their garden hobby without breaking the bank. When their hot water cylinder failed last year, they could replace it from savings without panic.

This level requires somewhere between $20,000 and $206,000 sitting in your accounts to bridge the gap between government payments and actual spending. The exact amount depends on your other income sources and how long retirement lasts. You’re covering basics comfortably, but still conscious of costs. Mortgage-free homeownership is basically essential at this tier, rent or mortgage payments would stretch the budget too thin.

A Comfortable Retirement Lifestyle

Spending: $80,000-$120,000 annually as a couple

This is where most New Zealanders want to land. You’re not counting pennies, unexpected bills don’t cause anxiety, and you can actually enjoy retirement instead of just surviving it.

Consider James and Linda, pulling in $95,000 yearly. They flew to Brisbane last year to see their grandson, eat out twice weekly without checking prices too carefully, and recently bought a newer secondhand car. Linda takes art classes, James golfs regularly, and they’re planning a South Island road trip next summer. Medical co-pays and prescriptions barely register as concerns.

You’ll need substantial personal savings to maintain this level—typically $400,000 to $700,000 depending on your exact spending target and other income sources. But here’s what that money buys: freedom from financial worry. You’re helping grandchildren with birthday gifts, replacing appliances when they break rather than limping them along, and saying yes to opportunities without constant budget checks.

Luxury Lifestyle Budget

Spending: $130,000+ annually as a couple

Few retirees reach this level, but those who do experience complete financial freedom. Private healthcare, regular international travel, newer vehicles, extensive hobbies—nothing feels financially out of reach.

This tier requires significant accumulated wealth, often $800,000 or more in savings and investments beyond your home. But at this point, you’re not just comfortable—you’re thriving. Supporting adult children buying their first homes becomes possible. Spontaneous weekend getaways don’t require budgeting discussions. You’re choosing experiences based on desire, not cost.

The Real Cost of Retirement Depends on Your Choices Today

Retirement planning isn’t about picking a magic number and hoping it works out. It’s about understanding your personal situation and taking action now.

Time is your biggest advantage. Starting early means your money compounds over decades. But starting late doesn’t mean you’re doomed—it just means being more strategic with your savings.

Check your current KiwiSaver balance against the age-based benchmarks above. Behind? Consider increasing contributions or speaking with a financial adviser. Ahead? You’ve got more flexibility.

Your future comfort depends entirely on the decisions you make today. Start planning now, not later.