Saving for retirement is something we all know we should do, but many of us don't fully grasp the impact of our savings decisions until retirement arrives - and by then, it can be too late.

At Lifetime Retirement Income, we specialise in retirement income, and we've heard countless retirees express the same regret: "I wish I'd known how much each dollar would matter."

Small savings decisions today can have a profound impact on your quality of life in retirement. The message is simple but crucial: don't underestimate the power of saving today. Whether retirement is 10, 20, or 30 years away, the choices you make now will shape your financial future.

Why NZ Superannuation alone might not be enough

If you're picturing retirement as a time for globe-trotting adventures, pursuing long-lost hobbies, or even just covering unexpected healthcare bills without worry, New Zealand Superannuation (NZ Super) could leave you short.

This government-funded pension kicks in at age 65 (for now) and acts as a basic safety net to prevent poverty - but it's not designed to bankroll the lifestyle many Kiwis envision. At its core, NZ Super provides a fortnightly payment to eligible residents, helping cover essentials like food, housing, and utilities. However, for most retirees, these amounts fall short of actual spending needs.

The retirement income gap

According to Massey University’s updated Retirement Expenditure Guidelines, the typical retiree requires additional income on top of NZ Super to maintain a comfortable life.

For instance:

• A single person in a provincial area on a "no-frills" budget might need an extra $42 per week.
• A couple living with more choices in a major city could require up to $950 weekly beyond their pension.
  
  

Let's break down the current rates. As of 1 April 2025 to 31 March 2026 (using the 'M' tax code and after-tax figures):

• Single person living alone or with a dependent child: $1,076.84 per fortnight
• Single person sharing accommodation (not with a partner): $994.00 per fortnight
• Couple (both qualifying): $1,656.68 combined per fortnight ($828.34 each)

These rates are adjusted annually on 1 April, factoring in inflation and wage growth.

But here's the catch: NZ Super isn't set in stone

With New Zealand's population aging rapidly, the system faces long-term fiscal pressures, as it is currently funded entirely through taxes. However, with elections looming (like the one on 7 November), policies could shift, potentially affecting when and how much you receive.

Let's face it: The cost of living doesn't retire when you do

Healthcare, food, transport, housing, and everyday essentials are all rising due to inflation, and retirees often face additional curveballs like home repairs or medical needs.

Relying on NZ Super alone might cover the basics, but a strong personal pension pot offers stability, flexibility, and protection against these pressures. By saving proactively, you create a financial cushion that lets you maintain your lifestyle and handle surprises. Experts suggest reviewing your budget regularly and adjusting contributions to keep pace with inflation.

Start early for a better retirement

Time is your biggest ally here, so starting to save as soon as possible is the smartest move you can make. The power of compound returns - where your money earns interest on interest - can turn modest contributions into a substantial nest egg over time. Think of it like a snowball rolling downhill: small, steady additions grow exponentially the longer they're invested.

Contributing just $100 a month to a retirement savings fund starting in your 20s could accumulate tens of thousands in compounded growth by retirement age, depending on your fund's performance and fees.

Act now

Tools like the Sorted Savings Calculator let you plug in your numbers to visualise this growth, while the Sorted Retirement Planner can help estimate how much you need to save based on your lifestyle goals. And consider consulting a financial advisor to tailor a plan that fits your goals.

After all, retirement should be about enjoying life, not just scraping by.

Written by: Sonia Speedy

Sonia Speedy has been a journalist for over 20 years, working in newspapers, magazines and radio. She also runs an online platform for parents at familytimes.co.nz. She lives on the Kāpiti Coast with her young family and loves writing stories that help make people's lives easier.