Things to think about before you retire

The concept of retirement means different things to different people. Whether it is the opportunity to travel and explore more of our own country, to spend time with the grandchildren, to start a new project, to pick up a new hobby, or to dabble in a mixture of all of the above, retirement is a time to enjoy. And, retirement should be a time to be free of financial stress. It can be a major life transition and we need to be honest about what our goals are and what trade-offs we are willing to live with. Even if retirement seems a while away, it is good to have a plan. Here are some things to consider before you retire.

1. How much do you need to retire?

Everyone’s retirement goals are different. To work out your goals, start by thinking about how long you expect to have in retirement, and what sort of lifestyle you want. 

How many years will I have in retirement?

There is no ‘retirement age’ in New Zealand. NZ Super is paid from age 65, but you don’t have to stop working to get it. These days, more and more people are working beyond 65 either full time or part time.

StatisticallY, we are living longer these days too. On average, 80% of 65-year-old men can now expect to live until they're 90, and 65-year-old women until they're 94. In the future, we will probably live even longer. Before you plan on retiring, it is worth using tools such as Sorted’s Retirement Planner to establish if you are on track to having enough to last your retirement, or need to make changes to your savings strategy to help you reach your goals.

What sort of retirement lifestyle do I want?

What will your cost of living be in retirement? Some costs (like healthcare) may go up, while others (such as education, clothing, housing, and work-related travel) may go down. If you have children, they may be financially independent.

Recent research reveals what New Zealanders are typically spending in retirement, which may help you refine your budget and lifestyle expectations.  According to the study, a basic “No Frills” lifestyle for a single retired person in a main city cost $602 a week, or $574 if the person lived in a rural location. A more comfortable retirement lifestyle, with some luxuries and treats (called a “Choices” lifestyle), cost $1,190 in a main city and $831 in the regions. 

For retired couples, a No Frills lifestyle cost $899 in the main cities and $640 in the regions. For a more comfortable Choices lifestyle, retired couples were spending $1,436 in the main cities and $1,136 in the provinces. 

You now know how much retirees generally spend in retirement. While this is not necessarily reflective of your goals, knowing these figures can help you plan so you achieve the retirement lifestyle you want.

2. Where will the money come from?

The current NZ Super rates after tax are $424 a week ($22,039 a year) if you’re single and living alone, or $652 per week after tax ($33,906 a year) for qualifying couples.

As referenced in the studies above (which show many New Zealanders are spending more than the NZ Super allowance each week in retirement), it is becoming increasingly common for retired New Zealanders to get their weekly income from at least two main sources – NZ Super and their own savings. Savings from retirement funds such as the NZAS Retirement Fund help boost weekly income, enabling you to maintain the lifestyle you want.

Other sources of income could include investment income from the sale or rental of property, proceeds from the sale of a business or an inheritance.

3. Getting rid of debt

Paying off debt in retirement can be more difficult due to reduced income. Paying off debt, including home loans, before we retire is advantageous because debt repayments can be one of the largest expenses for many people.

If you have any expensive debt (high-interest credit card or hire purchase debt), the first step in your retirement plan should be to pay that off as quickly as possible. has a guide to managing debt.

4. Get financial advice

Speaking with a financial adviser can help you to refine your savings strategy, articulate your financial goals, and ensure you take the necessary steps best suited for your specific situation. 

Visit the Financial Markets Authority website for a list of financial advisers

5. The perfect portfolio is a work in progress

As you get older, your timeline and needs change. So does your attitude to and tolerance for risk. With that in mind, it is important to re-assess the structure of your investments on a regular basis according to your age and how close you are to retirement.
The NZAS Retirement Fund has four investment options to choose from - Cash, Conservative, Balanced and Growth. As they get closer to needing their super, people generally adjust their investment strategy to suit their time horizons. You should discuss this with your financial adviser before making any changes to your investment options.

6. You are the best person to control your financial future

When it comes down to it, you are the only person that can take that first step towards kicking off your retirement savings. And you are also the only person who can make sure that your continuing strategy is right for you. So take ownership of your super and take control of your financial future!

1 Based on the latest Statistics New Zealand cohort life tables.

2New Zealand Retirement Expenditure Guidelines 2019

This information has been prepared by Mercer (N.Z.) Limited for general information only. The information does not take into account your personal objectives, financial situation or needs.This information has been prepared by Mercer (N.Z.) Limited for general information only. The information does not take into account your personal objectives, financial situation or needs.

22 March  2021