Seven steps to saving for a comfortable retirement

Retirement might sound like a far and distant land, but if you want a few creature comforts in your golden years, it's a good idea to start saving and investing as soon as you can.

1) How much will you need?

The first step in creating the retirement you want is getting an idea of how much you might need to save. This will vary from person to person – what lifestyle you want, where you live, if you rent or own your home and if you’re single or coupled up.

Although there’s no set magic number to work towards, there are ballpark figures out there to give you an idea of what to work towards, such as the Retirement Expenditure Guidelines which is produced each year by the Westpac Massey Fin-Ed Centre. In 2019, this research showed that a two-person household living in a city would need to have saved $493,000 for a no-frills lifestyle – this would provide enough for a basic standard of living with few, if any, luxuries. To achieve a ‘choices’ lifestyle, which would fund a more comfortable standard of living including more luxuries or treats, a city-based couple would need a retirement nest egg of $787,000. Read the full report to see figures for single people and no-frills lifestyles.

2) Take the pension into account

New Zealand has a universal retirement pension that is paid to eligible Kiwis when they reach 65. This could provide you with a safety net and help cover the basics. Take a look at Work and Income to make sure you're eligible and to see the current rates of payment.

3) Understanding KiwiSaver

One way to help build up healthy retirement savings is a KiwiSaver account. KiwiSaver is a voluntary, work-based savings initiative. If you’re working you can choose to contribute 3%, 4%, 6%, 8% or 10% of you pre-tax salary or wages. If you don’t choose a contribution rate, the default rate is 3%. Money will be automatically deducted from your pre-tax salary or wages to put into your KiwiSaver account. You can also make voluntary contributions at any time.

If you’re working and contributing to KiwiSaver, your employer has to contribute at least 3% of your pre-tax salary or wages. If you’re 18 to 65 years of age and live in New Zealand, the government also chips in 50c for each dollar you contribute, up to a maximum of $521.43 per year.

4) Accessing your KiwiSaver money

With KiwiSaver, your money is usually locked in until you turn 65 (meaning you can’t withdraw it until then), the idea is that you won’t be tempted to dip into it for things other than retirement. However, there are limited circumstances where you might be able to withdraw some or all of your KiwiSaver money early, including if you’re: seriously ill, suffering serious financial hardship, permanently emigrating, or buying your first home.

5) Other investments

If you don’t want to have all of your money locked in until you’re 65, you can also save and invest outside of KiwiSaver. Where you choose to put your money will depend on how much risk you’re willing to take on, how long you want to invest for and your savings goals. Managed Funds provide flexibility to invest when you want and access your investment when you need to, and term deposits are a low risk option, while savings accounts generally give easy access to your money. Take a look at our savings and investment options and see what Kiwi Wealth has to offer. To work out your investor personality and what kinds of investments you’ll be comfortable with, try Sorted’s Investor kickstarter tool.

6) Get rid of debt

Another important step towards a financially comfortable retirement, is paying down debt before you give up work. If you own your house, then aim to be mortgage-free by the time you retire. You’ll still have bills like rates, insurance and maintenance, but you won’t face rent increases or the prospect of having to find a new place to live if your landlord decides to sell. Try our mortgage repayment calculator to see how quickly you could pay off your home loan, and how much of a difference even small increases in your repayments could make.

7) Start calculating

Sorted has a retirement planner to help you work out if you’re financially on track for the retirement you want. Your KiwiSaver scheme provider is also likely to have a calculator that will estimate how much you'll have saved by the time you reach retirement. If you're a member of the Kiwi Wealth KiwiSaver Scheme, you can use the Future You tool to work out your estimated retirement income and to see how changes to your KiwiSaver investments could make a difference.


Please note, this is intended as general information only. It does not take into account your financial situation and goals and is not personal advice. For advice about your particular circumstances please see a financial adviser.

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