Kai Daniel
November 27, 2024
New Zealand Superannuation provides around $25,000 annually for individuals, and even less per person for couples. But most Kiwis will tell you that super alone just won’t be enough to keep up with life’s costs. In fact, research from Massey University in 2023 suggests that a single retiree will need about $1-1.2 million to live simply until age 95. For a more comfortable lifestyle, that figure jumps closer to $2 million.
KiwiSaver is one of the most popular ways Kiwis save for retirement, but relying solely on it can be risky. A recent report from the Retirement Commission and MJW found that the average balance for those aged 66-70 is around $58,125 - double the general average KiwiSaver balance of $33,514, but not nearly enough to sustain a long retirement. And here’s an important fact: most Kiwis are contributing just 3% of their income, which for many won’t be enough. As Retirement Commission’s Tom Hartmann puts it, “Defaults are extremely powerful. When you set the default at 3%, it sends a message that it’s enough - but for many, that’s not the case.”
While KiwiSaver is valuable, successful retirees often have more than one source of income. A 2019 study from Massey University found that over 60% of retirees earn some income from savings or term deposits, and nearly 30% receive dividends from shares.
It’s no secret; the earlier you start investing, the better your outcomes. We crunched the numbers, and here’s a takeaway: if you start investing just $4,000 annually at age 20 (earning a 7% annual return after fees and tax), you’ll accumulate a whopping $735,000 more by age 65 than if you start at 40. That’s the power of compound returns working in your favour. The takeaway here? It doesn’t always mean contributing more each month, but contributing to your retirement sooner. With consistent, automated contributions, even small ones, you can build a retirement nest egg without too much fuss.
At Bring On Monday, we believe the best thing you can do is take the first step. Whether that’s setting up a regular KiwiSaver contribution, exploring investment accounts, or automating savings into a high-interest fund. The earlier you start, the more secure your retirement can be.
“Automate as much of your saving and investing as possible. A ‘set and forget’ approach to building your retirement nest egg can make all the difference. Programmes like KiwiSaver or regular investment plans let you make progress without lifting a finger.”
Remember: It’s never too early (or too late) to start building your retirement dreams. Find out how Bring On Monday can help you create a plan that fits your life.
Whether you are looking for financial advisory or an accountant, Bring On Monday is your financial advisory and small business accounting firm here to help you! Get in touch for a free chat.
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