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The Westpac Massey Fin-Ed Centre has released updated Retirement Expenditure Guidelines to help New Zealanders plan for their retirement. The new report, which was developed in partnership with Workplace Savings NZ, shows there is a growing gap between the cost of living in retirement and New Zealand Superannuation payments.
The guidelines are based on figures from Statistics New Zealand’s triennial Household Economic Survey, adjusted for the effect of inflation, and calculate what retirees currently spend to maintain either a ‘no frills’ retirement, or a more fulfilling ‘choices’ lifestyle that includes some luxuries. Costs are calculated for one and two-person households in both metropolitan (Auckland, Wellington and Christchurch) and provincial areas.
For example, a one-person household in a metropolitan area is currently spending $489.77 per week for a ‘no frills’ retirement, while a single person living in the provinces is spending $418.92 per week. The figures for individuals wishing to add some luxuries to their lifestyle are $754.03 per week and $782.02 per week for metropolitan and provincial residents respectively.
“Given the current New Zealand Superannuation payment for a single person living alone is just $374.53 per week, it quickly becomes apparent that retirees need additional income to survive,” says Massey University’s Dr Claire Matthews, the report’s author. “That’s even the case when spending is limited to the essentials, the shortfall quickly widens if you want a more comfortable lifestyle.
“When the guidelines talk about a ‘choices’ lifestyle, it’s not about being extravagant. It just means not having to watch every cent and being able to enjoy some treats from time to time – things like going out for a meal, not buying the cheapest cuts of meat, doing some travel, or going to the movies or theatre.”
Dr Matthews says only two-person metropolitan households can achieve a ‘no frills’ retirement with the standard rate of New Zealand Superannuation, which is $576.20 per week for a couple. But couples living in the provinces, or those wanting a ‘choices’ lifestyle, will need additional savings.
Workplace Savings NZ executive director Bruce Kerr says he hopes the Retirement Expenditure Guidelines will assist people to “cut through that much-asked and somewhat scary question: ‘How much retirement savings is enough?’”
“The retirement savings industry focuses a lot of energy and money on the accumulation phase of the retirement savings journey,” he says, “but few providers remind their members that a lifetime of savings effort is really about providing an income in the period after paid employment.”
The Westpac Massey Fin-Ed Centre, or Financial Education and Research Centre, is a joint initiative by Westpac and Massey University that aims to improve the financial wellbeing of New Zealanders.
Workplace Savings NZ provides financial support to produce the Retirement Expenditure Guidelines. It is important to note that the guidelines do not represent recommended levels of expenditure but reflect actual levels of expenditure by retired households.
The New Zealand Retirement Expenditure Guidelines 2015 can be downloaded at: http://bit.ly/retirement-ex-guidelines-2015
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Created: 09/11/2015 | Last updated: 05/11/2015
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