How Much Will You Really Need in Retirement? The $1.2 Million Reality Check
Published on April 5, 2023 by Duck Bell
When planning for retirement, it’s tempting to assume a modest balance will be enough. But research suggests that couples in New Zealand may need up to $1.2 million for a comfortable retirement. Are your expectations realistic?
Breaking Down the Numbers
Lifestyle costs, housing expenses, and inflation all contribute to a higher-than-expected retirement price tag. Even with a paid-off home, maintenance, insurance, and daily costs continue.
Realistic Scenarios
- Modest Retirement: $600k–$800k could support a comfortable, low-key lifestyle.
- Active Lifestyle: $1M–$1.2M needed for travel, hobbies, and flexibility.
- Luxury Retirement: More than $1.5M if expecting international travel and high discretionary spending.
Planning Tips to Bridge the Gap
- Use Retirement Calculators: Estimate the savings you’ll need based on your lifestyle expectations.
- Adjust Contributions: Increase your KiwiSaver or other investments to bridge any gap.
- Consider Fund Choice: Growth funds may offer higher long-term returns for younger members, helping you reach your goal faster.
Conclusion
Setting realistic targets and planning early is key. By understanding what you truly need, you can make informed decisions and build a retirement plan that matches your lifestyle goals.