In the fifth instalment of our Money Talks series, freelancers Tess Nichol and Alice Webb-Liddall talk about retirement, and having enough money squirrelled away to enjoy it comfortably.

For two young writers only a few years into their careers, the thought of being on the other end of their working life seems almost unimaginably far away.

Tess has had a KiwiSaver account quietly collecting money over the years (although that’s on pause while she’s freelancing as her income levels are variable), but otherwise neither of them has thought a lot about how much you need once you clock out of work for the last time.

Alice has recently blown the dust off her KiwiSaver account to find its balance has been declining for over a year. A year in which she contributed nothing to it and then cast it off to the side in the hope she would forget it existed and then the problem would be solved forever.

And do you really need $100,000 by the time you’re 30 like the headlines lead us to believe? That seems like a terrifyingly unachievable target – and one that Tess, with a year to go, has absolutely no hope of hitting.

Luckily, AMP managing director Blair Vernon doesn’t think that whopping sum is necessary to feel on track by the time you exit your twenties.

“If we say that people are just going to throw the towel in and give up. The truth of the matter is how much you need in retirement is going to be different for every individual,” he says.

“Some people have what I call ‘chocolate box’ views of retirement where they have overseas trips and cruises and who knows what lined up. Other people have a vision of tending their garden and growing their own vegetables. So the reality is how much you need is derived by what you intend to do and how you intend to live.”

Paying off a house before retirement is a source of great comfort according to many people, Vernon says, so making sure you can pay off your mortgage before you stop earning is wise to provide security.

“If you’ve got a debt-free property you’ve obviously got a lot more certainty.”

For that reason he thinks it’s worth dipping into your KiwiSaver to help secure a mortgage. But he warns people to consider whether they necessarily want to take out the maximum amount they can borrow.

Buying a house at the maximum level you can pay off not only depletes your disposable income during your working years, it also impacts how much can be put aside for savings, including retirement saving.

“I see too many people whose framework for affordability is determined on the absolute maximum they can borrow and they reluctantly go beyond that for the house they really want, which is not an optimum scenario.”

Those who haven’t been contributing to their KiwiSaver shouldn’t panic either – people in employment with plenty of earning years ahead of them still have time to accumulate a decent retirement fund. But it does require a bit of planning, Vernon says.

“Do you intend to work all the way up to death, and if not, how on earth are you going to fund that?

“You can hope the government will provide super and that’s fine, but we know that’s not necessarily going to give you the quality of life in retirement you may aspire to. So then you’ve got to decide, ‘what am I going to trim out of my current budget?’”

Alice and Tess muse on where they’re at in terms of looking after their future selves’ finances.

Tess: Look I’ll come clean, my KiwiSaver stuff still gets sent to my parents’ house down in Wellington and my mum kind of keeps an eye on it more than I do. That’s an embarrassing thing to admit but I really appreciate it – especially because when I was in uni and earning hardly anything she did things like put in the minimum amount so I got the $521.43 government credit. But I have no idea how much is in there.

Alice: Well I just found my KiwiSaver account for the first time in probably a year, logged on, and realised its balance is not only less than $500, it’s also quite rapidly declining, and I have absolutely no idea what to do about that. It looks like the last time I contributed was when I was working part-time in a cafe throughout uni, and it’s been over a year since then.

I never really remember talking with anyone about KiwiSaver, ever, which makes me feel very guilty when I see that my friends have balances in the thousands and some in the tens of thousands of dollars.

Tess: Oh my god Alice, I didn’t even know it was possible for the balance to decrease! That sucks. I feel lucky because I don’t have any debt at the moment. I’ve hardly got any savings, but at least I haven’t got credit card debt which means now I’m earning money again after coming home from an OE, I can focus solely on spending money and saving, without having to address the issue of keeping on top of interest.

Alice: Yeah I’ve luckily never needed a credit card and hope to avoid getting one for as long as I can, so there’s no debt there, but student loan is a big one for me. I took out the full amount for course related costs ($2000 per year) and accommodation (approx. $180 per week) on top of the already painfully high cost of the course itself, which means I’ve racked up a bill that makes it look like I went to law school

I would say that at the moment I am much more aware and much more likely to keep track of my student loan than my KiwiSaver. Being in debt now scares me way more than topping up an account for 40 years down the track.

Tess: How often do you think about retirement savings? I feel like money is either for bills or for spending – putting away regular savings seems like a big shift in mindset.

Alice: I’ve said previously that I actually think I’m quite a good saver, but there is a huge difference in that I’m saving for a more immediate use (travel), not for a long-term goal (comfortable retirement).

Some weeks my income goes almost exclusively to bills, other weeks I am sensible and put some money into my travel savings, and then there’s some times when I wake up still a bit drunk and blow $100 on a stupid foot tattoo…

What I’m saying is, I feel like the saving and spending balance out most of the time, but thinking about long-term saving AKA retirement saving is the hurdle I stumble over.

Tess: That’s so true, I feel the same way.

Alice: Also, like Blair said, it’s not the end of the world if your retirement savings isn’t stocked up when you’re young. That whole idea of saving $100,000 by 30 is so ridiculously unreachable for so many people and it doesn’t worry me at all that I’ll probably have only a fraction of that in 10 years’ time.

I think the first step for me, particularly while I’m a freelancer and there’s nobody doing it for me, should be to sit down and figure out how to contribute to my KiwiSaver so that at least I know how to do it should there come a time when I finally realise its importance.

Tess: I’m actually moving out of freelancing and back into steady employment soon – I did that PAYE salary calculator online which shows you how much you take home every week and you can adjust it so it shows how much your take home pay decreases if you pay three, four or eight per cent to your KiwiSaver. It was interesting – it’s not that much less to increase to 8 per cent. I almost feel like maybe it’s better to have a tiny portion less now, but come out the other end with more at retirement because that extra will accumulate over time.

Alice: My best friend and I worked the same first job and I remember when she helped me fill in the forms for tax and KiwiSaver and all that good stuff she told me to contribute 8% but I didn’t care at all so ticked the 3%.

Looking back, that was a part-time job during high school, when I wasn’t paying for any of my own food, rent, clothing, or petrol, and I can’t for the life of me figure out what I used to spend my money on. My friend was right, I would not have noticed if there were an extra few dollars coming out of my pay back then and it almost certainly would have made the number in my KiwiSaver now look a bit less grim.

Tess: A life change like starting a new job seems like a good time to consider your circumstances. Like, if I’m getting a pay rise do I want to start putting more into my savings? Maybe if I do that from the get go I won’t even notice because I’ll still have the same amount of spending money. That seems smart, but I know it’s tempting to just spend it.

Alice: That’s probably a valid point, if I made KiwiSaver contributions like a bill payment that came out automatically then I probably wouldn’t notice. I moved into a way cheaper flat about six months ago so there’s definitely some leftover money some of the time that I could definitely be putting aside, which could be a lot more useful down the track.

Tess: Does all this give you pause about taking a big trip – do you stress at all about where you’ll be at 30?

Alice: Interesting question but no. My feet are itching for travel, and I don’t think spending money on experiences like exploring the world is a waste of money.

I don’t want to compromise on soaking up everything I can through travel just because I’m thinking about how I’ll live in 2059. If by the time I turn 60 I’m living in a smaller house than I’d hoped or wearing different clothing than I’d imagined because I’d spent my money on experiences at 20, I don’t think I’d be upset.

More from our Money Talks series:

An honest conversation between two freelancers about money

Love and money: two freelancers discuss managing money and relationships

How to spend it: two freelancers on why they buy the things they do

Full time vs freelancing: is being your own boss really worth the stress

This content was created in paid partnership with AMP. Learn more about our partnerships here.