How Much Should You Save for Retirement?

5 Smart Questions Every NZ Family Should Ask

If you're in your 40s or 50s, with a mortgage, a couple of kids, and the usual life expenses, retirement can feel a long way off. But this is one of the most important decades to take stock of where you're headed. Understanding how much you need to save for retirement doesn't mean locking in a number - it means getting clarity around your lifestyle goals, income sources, and saving habits.

Rather than relying on generic advice, here are five practical questions to help you start building a retirement plan that fits your life.

1. What kind of retirement lifestyle are you aiming for?

Every retirement looks different. Some people want the basics covered with a bit of breathing room, while others hope for freedom to travel, pursue hobbies, or support family. The kind of lifestyle you're aiming for plays a big part in determining how much you'll need.

Massey University's Retirement Expenditure Guidelines outline two main lifestyle types: a 'no-frills' retirement, which covers essentials, and a 'choices' lifestyle, which includes things like travel and eating out. The difference in spending between the two can be substantial - potentially double. If you haven't already, it's worth using tools such as the Sorted Retirement Planner to estimate your weekly needs based on your goals.

By defining the lifestyle you want now, you can begin shaping a Financial Planning approach that gets you there on your own terms.

2. When do you want to retire - and for how long?

There's no official retirement age in New Zealand, although most people plan around turning 65, when NZ Super becomes available. But whether you want to retire at 60, 68, or gradually reduce your working hours, it's important to think about the time horizon.

With life expectancy increasing, a couple retiring at 65 could need to fund 25–30 years of living expenses. It's not uncommon for New Zealanders to live into their late 80s or 90s, which means savings need to go further than many people expect.

Deciding when you'd like to stop full-time work - and how long you may need your money to last - provides essential context for decisions about Investments, KiwiSaver settings, and contribution strategies.

3. What income will you have in retirement?

Your retirement income will likely come from a combination of sources, and it's important to assess whether those sources are on track to support the lifestyle you're aiming for.

NZ Superannuation is a universal benefit for eligible New Zealanders aged 65 and over. While it provides a stable base, it's generally not enough on its own to fund a comfortable lifestyle - especially in urban centres or for those with ongoing housing costs.

For most people, KiwiSaver will be the second major source of income. How much you end up with depends on your contribution rate, your employer's contributions, and your chosen investment fund. Many New Zealanders in their 40s or 50s still have time to build up their KiwiSaver balance significantly, especially by reviewing their fund type or increasing contributions. If you haven't checked your current settings recently, now is a good time to revisit your KiwiSaver strategy.

Beyond KiwiSaver, other assets such as term deposits, managed funds, shares, or investment properties can help bridge the gap. Even part-time work or business income during early retirement years can make a meaningful difference.

Understanding your likely income streams - and comparing them with your expected costs - can help clarify whether your current Retirement Planning is on track or needs adjustment.

4. Are you saving enough now to reach your goal?

This is often the point where things get real. Many families are focused on mortgages, education costs, and day-to-day living, leaving retirement savings as more of a "later" priority. But with potentially 15–25 working years left, this is a crucial window for progress.

The best place to start is with a gap analysis. Tools like the Sorted Retirement Planner or your KiwiSaver provider's forecast tools can give a sense of how much you're projected to have by 65, and how that stacks up against your likely retirement spending.

If there's a shortfall, small changes now can make a big difference over time:

• Increasing your KiwiSaver contribution rate from 3% to 4% or higher

• Redirecting any windfalls, such as bonuses or tax refunds, into Long-Term Investments

• Reducing discretionary spending or reviewing big-ticket costs

• Setting up automatic transfers to a separate investment or retirement savings account

It's also worth reviewing your mortgage timeline. Being mortgage-free by the time you retire significantly reduces your required income and gives you more flexibility. If you're on track to repay your home loan later than 65, it may be worth discussing options with a Financial Adviser to see whether there's a smarter path forward.

5. Is your money invested in the right way for your time horizon?

For long-term goals like retirement, how your savings are invested matters just as much as how much you save.

If you're still 15 or 20 years out from retirement, your money may have time to deal with market fluctuations as well as benefit from compound growth. This is where growth-oriented KiwiSaver or managed funds can help your balance build more effectively than conservative cash holdings. On the other hand, as you get closer to retirement, it may make sense to gradually move some funds into lower-risk options to preserve what you've built.

The way your retirement savings are invested plays a significant role in whether you'll meet your long-term goals. If it's been a while since you reviewed your KiwiSaver settings - such as your fund type, contribution rate, or investment timeframe - it's worth taking a closer look.

To help with this, you can use Helium's KiwiSaver Fact Find to assess whether your current setup is aligned with your retirement objectives. In the long run, it will help you make more informed decisions about how your money is working for you.

Beyond KiwiSaver, it's important to consider how your other investments are structured. Are they diversified? Are they accessible when needed? Do they match your comfort with risk and the timeframe you're working with? Clarifying these points now can give you greater confidence in the years ahead.

Working through these questions can help you build an investment strategy that supports both security and growth over the coming decades.

What You Do Next Matters Most

If you're asking yourself how much you should be saving for retirement, you're already on the right path. It's not about finding a perfect number. It's about understanding your own goals, knowing what resources you'll have, and taking steps now to close any gaps.

By your 40s or 50s, the choices you make can make a real difference. You still have time on your side - but now is the moment to take stock. You can increase your contributions, review your investment mix, or make a clear plan with a professional. The choices you make in the next 10 to 15 years will affect your retirement options later.

Retirement planning isn't just about money. It's about building the freedom to live the way you want, with confidence and peace of mind. And the earlier you take control, the more flexibility you'll have when that time comes.

If you're not sure where to begin or want help making sense of your options, it's worth sitting down with a financial adviser who understands how to navigate the decisions ahead. Because retirement shouldn't be a leap into the unknown - it should be the natural next step in a plan that's already working for you.

Jeshal Patel

Certified Financial Planner

Disclaimer
This article is general information, does not consider your financial situation or goals, and does not constitute personalised advice. There are no warranties, expressed or implied, regarding the accuracy or completeness of any information included as part of this article.