Sorted Money Week 2021: Retirement planning

This week is Sorted Money Week – an annual campaign aimed at raising New Zealanders’ financial capability by demystifying key money topics and providing open channels for discussion on a subject matter that is often seen as taboo.

Sorted believe that financial wellbeing is a taonga/treasure that needs nurturing; for our ourselves, our whānau and the community. So, it is encouraging people to keep the kōrero going on money questions because any money question is a good question!

To help get the discussion going, Sorted has put together some great resources about a range of money topics, including budgeting, saving, investing, Kiwisaver, loans and more. To get your mind on the money (so to speak), here are some frequently asked questions to help you plan for retirement.

Do I really need $1 million to retire?

Pay no attention to headline numbers aimed to shock you into saving! You’ll probably need far less than they let on. Think of it this way: for every $100,000 you save, that typically equates to around $100 a week throughout your retirement. And that’s on top of NZ Super. So most of us will not need that much to retire comfortably, but of course it depends on how you’d like your lifestyle to be. Here’s where you can check your own retirement numbers easily

Is the 25x rule still relevant in 2021?

The ’25x rule’ aims to provide an answer to how much you need to retire: 25 times the annual income you’d like in retirement. So, if you’d like $30,000 a year when you retire above NZ Super, you need to build up $750,000 through your saving and investing (25 x 30,000). It’s important to know that this is just one way to set your retirement goal, and it may or may not be enough for what you are aiming to achieve. Our retirement calculator can help you see if it works for you

Should I aim to clear my debt (eg, my mortgage or other debts) before I retire?

Ideally, yes. For most of us, retirement means stepping back from paid work and living with more of a fixed (and typically reduced) income, which can make carrying debt all the heavier. And the less we can use our retirement savings for paying back debt, the better. Our debt and mortgage calculators can help you chart the quickest way out of debt before you retire.

How much do I need day to day in retirement?

It’s challenging to estimate how much you’ll need for your future lifestyle, but one way is to have a look at what retirees are spending now. Do you think you’ll live in one of our large cities, or in a smaller town? That’s one of the things that can influence how much you’ll need. We’ve added some figures in our retirement calculator for you to work out your own retirement number. Here’s where to find that tool.

NZ Super – how does it work?

NZ Super is the government pension paid to Kiwis aged 65 and older. It’s currently $437 for individuals, $672 for couples. Everyone eligible receives it, no matter how much they are still earning (you can still work and receive it), what they have in savings or investments, how much they own, or how much they’ve paid in taxes. You need to be a legal resident of New Zealand and have lived here for 10 years since age 20, with 5 of those years being after you turn 50. Here’s more on how NZ Super works and the current rates. 

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