The million dollar question - how much is enough to retire?

Published: Mon 4 Nov 2019 10:29 AM
Working out how much money is needed to retire can be a complex process, and at current levels, the average person will outlive their savings by roughly nine years according to the World Economic Forum’s analysis, so how do we close the gap?
Over the years, there have been numerous studies on this subject. Recent work by ASB, incorporating New Zealand and international research alongside its own data, has found for most people, saving 10% of their income over their working life will provide enough money at retirement to last about 25 years.
ASB head of KiwiSaver Aidan Vince acknowledges there are a lot of elements to consider, but says having a few general rules of thumb can help.
“Working out how much money you need to live a comfortable retirement, there are so many variables and things to consider; how long do your savings need to last? What sort of annual income are your assets and retirement savings likely to generate in the future? How much will you likely spend each year during the stages of retirement relative to earlier on in life? Do you want there to be anything left? These are all important questions to address when planning for a comfortable retirement,” says Vince.
“All of that can seem complicated but we know a good advisor can help you. We equally know New Zealanders don't tend to ask for advice so we’ve created a figure to get people started.
“As a general rule, you should aim for 10 times your current salary or wages at retirement. At that rate, assuming you use 5% of the opening value of your savings each year, your money could last roughly 25 years,” says Vince.
According to the most recent KiwiSaver survey, 65% of people think they need to save more for retirement and 17% don’t know, leaving just 18% feeling like they are on track. Vince says this isn’t surprising, however most New Zealanders will be saving more than they think they are.
“We know 10% can seem like a lot to save, especially on a lower income, but anyone who has KiwiSaver is already saving 6% with the 3% they contribute as well as a minimum 3% from their employer,” says Vince.
Data from Statistics New Zealand shows average life expectancy is increasing, meaning retirement savings need to last longer.
“The question of how much people need to be saving to be able to enjoy retirement is one that is becoming increasingly important as people live longer and life expectancy continues to increase.
“Everyone’s retirement aspirations are different, so decide what sort of retirement lifestyle you would like to have, and then you can start to work out the amount of income and the structures you’ll need to support it.”
“We appreciate that it can seem daunting, but the earlier you start to put money aside the better,” says Vince.
ASB Bank
Helping you get one step ahead.
In 1847, ASB opened as the Auckland Savings Bank with the pledge: 'to serve the community; to grow and to help Kiwis grow'. And that is very much what ASB is about today.
ASB is a leading provider of integrated financial services in New Zealand including retail, business and rural banking, funds management and insurance.
ASB strives to consistently provide its customers with outstanding service and innovative financial solutions. They're dedicated to providing simple financial products that allow their customers to bank with them how and when they want.
We all have our own ways to measure progress, and our own stories about the things that matter to us. Whatever way you choose to measure progress, and whatever your goals, ASB is there to help you get one step ahead.
Contact ASB Bank

Next in Business, Science, and Tech

REINZ June Data: Property Market A Little Chilly Amid Economic Challenges
Profit First For Law Firms: How To Run A Profitable Law Firm
By: Hugh Grant
NZ’s Record-Breaking Ocean Temperatures – Expert Reaction
By: Science Media Centre
Bacteria-Fighting Viruses Propel Emerging New Zealand Scientist To International Recognition
By: Bioprotection Aotearoa
Data Peaks As Fibre Network Reaches 1.5 Million Addresses
By: Bill Bennett
New AI Predator Detection Tools Available
By: Department of Conservation
View as: DESKTOP | MOBILE © Scoop Media