Planning for the future can be a daunting task, especially with the state of the world at the moment meaning you might not know what that future actually looks like. But it’s that uncertainty that makes it even more important to plan for your retirement now.

This content was created in paid partnership with Kiwi Wealth.

We all dream of a life beyond work in which we can do whatever we want, whenever we want. That might mean travelling for months to far flung places, spending more time with friends and family at home, taking up a new hobby like painting or gardening, or learning a new language like we always said we would but never found the time. 

But while it’s easy to list off all the things we dream of doing, it’s a whole lot harder to say how much it’s all going to cost. After all, most of us don’t even know how much we need in a year at this point in time, let alone what we’ll need decades down the track in our 60s, 70s and beyond. 

Currently, all New Zealanders aged 65 and over qualify for a government pension, otherwise known as NZ Super. How much you get varies vastly depending on your circumstances. For example, if you’re single and living alone, you get $437 a week (or $22,721 a year) after tax, while qualifying couples get $672 a week (or $34,955 a year) after tax. Funding the scheme costs the government more than $14 billion a year, but in most cases, NZ Super alone isn’t considered enough to get by. According to Massey University’s most recent report on retirement expenditure, researchers estimated that even the most basic “no frills” lifestyle for a one-person household in Auckland, Wellington or Christchurch would cost $726 a week – a pretty sizeable ($289) gap for anyone relying solely on their superannuation at 2021 rates.

Which is why, since its introduction in 2007, New Zealanders have long been encouraged to fill that gap with personal savings through the KiwiSaver scheme. More than a decade on, KiwiSaver has helped set millions of people onto a better path towards retirement. But big questions still remain, like how much do we actually need? Are we saving enough? And what if we want to be able to do more than just afford to pay our bills in retirement? 

“It’s difficult because you really don’t know what life’s going to be like 20, 30 or 40 years down the track and what you’re going to be like,” says Morne Redgard, chief customer officer at Kiwi Wealth. “For instance, are you going to be healthy enough to travel once you hit 65? Or if you own your home, will you still have a mortgage outstanding? So when people ask ‘how much do people usually save for retirement’, there’s no one answer – every single person is different.”

Because there are so many possible variations, Redgard insists it’s important for every individual to take time to think about the sort of lifestyle they envision and calculate how much it’s likely going to cost. Sitting down with a financial adviser is a great way of doing this, but there are also tools available online that will help you get a rough idea of what you should be aiming for further down the track.

“Ideally, you want to plan for more than just what you need. If you oversave, that’s much better than trying to plan for a simple life, undersaving, and then realising you’ve got different wants and needs that you can’t fulfill at that point,” he says. “But even if you take the ‘no frills’ option as a starter, the point is to start as early as you can.”

And to help plan for the future New Zealanders need to be playing closer attention to their KiwiSaver. For those also looking to use their KiwiSaver to help purchase their first home, Redgard insists that while it’s possible to save enough for both retirement and jumping on the property ladder, the important thing is to make sure you’re in the correct fund for what you’re saving for, and when you think you’ll need those savings. 

“If you’re going to be making a withdrawal in the next six to 12 months to purchase a property, you have to be very careful over what fund you’re in. If you’re in a growth fund, for example, the last thing you want is for the markets to go down before you take the money out and you find you’ve lost 20-30% of your deposit,” he says. 

“And if you do make a first home withdrawal, the key thing afterwards is to refocus that fund towards retirement which will probably be a much longer term investment.”

However, saving for the future is always easier said than done, especially with the financial uncertainties brought about by Covid-19. According to the Financial Market Authority’s most recent annual report, KiwiSaver withdrawals on significant hardship grounds increased more than 40%, with some budgeting advisors reportedly seeing a 25-40% jump in the number of payouts being approved as people struggle with basic necessities and mounting debt. 

“Unfortunately, there are many New Zealanders out there just trying to keep their heads above water, and for those people, we certainly have to be realistic: if there’s no available income left at the end of the month, how’s anybody supposed to be worried and thinking about retirement when they’re barely getting by today?” says Redgard. 

“The important thing for those people is to tackle the problems that are biggest at that point in time and really get a good handle on their [financial situation] today. We also really urge people to start developing good money habits not just from a savings point of view but also from a spending point of view, because those good habits will hopefully give them the opportunity later on to start putting a little bit of excess away for the future.”

Whatever your financial situation, the reality is that one day, that three, six, or 10% you put away from your income today will somehow have to be enough for you in 20, 30 or 40 years’ time. And while the thought of needing to save for a six-figure sum seems daunting and perhaps even impossible at first, starting now will make things just that bit easier later on – surely, your future self will thank you for it.