The 2021 Retirement Expenditure Guideline study undertaken by Massey University is designed to assist pre-retirement New Zealanders make financial plans for retirement.

The report says the average retired household continues to spend in excess of NZ Superannuation, highlighting the importance of preparing for retirement. A two-person household in the main cities in 2021 would need to have saved $809,000 to fund a ‘choices’ lifestyle, while a couple living in the provinces would need $511,000.

The lump sums required for a ‘choices’ lifestyle for a one-person household are $600,000 and $688,000 for metropolitan and provincial areas respectively.

At a September forum the Retirement Commissioner made a comment that New Zealanders “are sleepwalking into retirement”. 

Retirement is often listed as one of the most stressful life events next to a family member dying and divorce. Interestingly, the average effective age for men in New Zealand retiring is 69.8 and women 66.4 according to the OECD. Often it is not just for financial reasons New Zealanders work past age 65, it can also be for social reasons.

Two levels of expenditure are discussed in the report. The ‘No Frills guidelines’ reflect a basic standard of living that includes few, if any, luxuries. The ‘Choices guidelines’ represent a more comfortable standard of living, which includes some luxuries or treats. The No Frills Guidelines are based on the average expenditure of the bottom 20% of retired households. The Choices Guidelines are based on the average expenditure of the top 40% of retired households.

The study revealed that the key inflationary drivers for superannuants for the twelve months ended 30th June 2021 were transport (up 9.4%), restaurant meals and ready-to-eat food (up 4.3%), recreation and culture (up 2.9%), housing and household utilities.

Expenditure patterns change over time due to societal changes and the effect of inflation. The Massey University report discusses other issues that need to be considered as part of retirement preparation, and provides useful sources of information that will assist.

You can download the full report here; New Zealand Retirement Expenditure Guidelines 2021 Report

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