The median or middle 65-year-old New Zealander ‘only’ has $290,000. I put only in brackets because although that is a lot for some people, it is not really a lot for the average person hitting retirement, and it is definitely not enough for the average person to continue living their current lifestyle.

And that includes the value of the house for homeowners too. So, the amount of spendable cash is much less than $290,000.

Am I saving enough for retirement?

To see how much of a poor effort that really is, let’s assume the typical New Zealander starts with a net worth of zero at age 30. How much do they need to save per month to have $290,000 in 35 years’ time, using a conservative 5% returns estimate?

About $250 per month.

If you are earning $60,000 per year in net household income, that is just 5% of your after-tax income.

Now that means you are spending $57,000 per year.

$290,000 in savings is not going to cut it for your retirement on that level of spending. So, either the average New Zealander needs to save more (which isn’t happening), or drastically cut back on their lifestyle.

The fact that houses are getting more expensive means that the situation may not be getting better anytime soon. We are buying houses later in our life than our predecessors because of the bigger deposits required, and we are taking longer to pay off the mortgage because of the larger mortgages.

That’s why it’s more important than ever to take saving for retirement seriously.

Saving for retirement

We have no problem saving for holidays, presents, cars, or any other short to medium savings goals we have. Yet, judging by the numbers, we keep delaying saving for the most important goal of all. Retirement.

Maybe it’s time to start thinking of retirement in terms of saving for the biggest purchase of our lives. Our freedom.

If you ignore it, it won’t go away. So start saving for your future, just as you are for that house, car, and holiday. It is possible to enjoy today and save for later. Otherwise your last 30 years may be extremely unenjoyable. Why do you think one of the most common regrets of older people is that they had started saving earlier or more for their retirement?

To help me save, I have started thinking of retirement as a purchase. I am purchasing freedom over my time to do all the things I dream of. People often say a house is the biggest purchase you will make. I think the biggest purchase I will ever make is my future. As I get older, I have less and less time on this earth, and if I can buy more valuable time on earth then that is one heck of a motivator for me.

***Before you send me any hate for dismissing $290,000 as not much for low income earners. I am not. These are numbers for middle New Zealand, and they can do much better.***

If you need help with your personal retirement planning, then get in touch today.

The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here