How to Avoid Poverty in Retirement

Read More

Avoid Poverty in Retirement

One of the most difficult aspects of planning for retirement is estimating just how much it will cost to live when the kids and the mortgage are gone and you are no longer working. People find themselves in different situations at retirement. Costs of living can vary depending on geographic location and how many people are living in the household. Ideally, everybody planning for retirement needs to set out a retirement budget based on their own circumstances, but this is not easy to do when you are still working or still have children at home.

A recent study by Dr Claire Matthews, of Massey University, gives clear guidelines on how much it actually costs to live in retirement based on data from Statistics New Zealand’s Household Economic Survey and an online survey (see the full report here). There are spending guidelines for eight groups of retirees, with groupings based on location (Metro and Provincial), household size (One or Two) and budget type (‘No Frills’ or ‘Choices’). The guidelines exclude the cost of housing, which can vary considerably depending on location and whether you are renting or live in your own home.

The messages from the data are clear. At a “No Frills’ level of spending, NZ Superannuation is more than sufficient to cover non-housing expenses, however any surplus is likely to be absorbed by housing costs. At a ‘Choices’ level of spending, NZ Superannuation is almost enough to cover non-housing expenses for one person, but for a two-person household there is a substantial shortfall. The ‘No Frills’ budget allows for no spending on clothing and footwear, and very limited spending on food, power, health, recreation, takeaways and restaurants. To avoid poverty and have a comfortable retirement, retirees need income to supplement NZ Superannuation, either from part time employment or investments.


Related Articles

Liz Koh

Budget Winners and Losers

The latest Government budget had something for everyone but while most households will be a few dollars a week better off, there are some clear winners and losers. In the winners’ corner are businesses, those on high incomes, and savers. The biggest losers are property investors who have built large portfolios financed partly by tax rebates.

Read More »

Top Up or Miss Out

The end of June is an important date for KiwiSaver members. The financial year for KiwiSaver runs from 1 July 2009 to 30 June 2010 and if you have contributed at least $1,040 to KiwiSaver during that time, you will be eligible for the full amount of Government tax credit to be paid into your KiwiSaver account in July.

Read More »

Responsible Investing

There is a worldwide trend for investors to want to make a positive contribution to the world by investing in companies that are socially and environmentally responsible. If you are passionate about the effects of climate change, the scarcity of food and water, and social or environmental policies in general, then you will no doubt wish to ensure that the companies in which you invest are going about their business in a manner that is consistent with your views.

Read More »

Helping You Live your retirement To the Max

Keep in touch

Fill in your details and we’ll get back to you in no time.