How much do retirees in New Zealand actually spend, and on what?

Dr Claire Matthews from Massey University publishes the Retirement Expenditure Guidelines, now in its 4th iteration.  The Retirement Expenditure Guidelines surveys actual spending by retired households in New Zealand and provides a wealth of interesting data.

Some of the findings include:

  • NZ Super on its own is not sufficient to sustain even a no-frills level of retirement spending, unless you are a 2 person household living in a metropolitan area of New Zealand (and assuming you own your own house).
  • For an individual retiree living in a metropolitan area of New Zealand, savings of about $102k will be needed by age 65 to supplement NZ Super to fund a very basic “no frills” retirement.

But this is indeed a bare-bones existence.  Most (if not all) of the clients I talk with aspire to a significantly higher standard of living in retirement.  Helpfully, the Retirement Expenditure Guidelines describes a “choices” level of retirement expenditure – think better food, eating out from time to time, occasional holidays, etc.  To fund a “choices” retirement, savings to supplement NZ Super at age 65 will need to be:

  • $360k-$390k for one person households
  • $400k-$490k for two person households

The range reflects differences between provincial (more expensive) and metropolitan areas, and also assumes you own your house.

Another interesting data point to emerge is exactly where retirees spend their money.  The weekly spending for a 2 person “choices” household in a metro area looks like this:

Category $/week Percentage
Recreation & Culture  $141 13%
Food  $125 11%
Insurance  $93 8%
Home ownership  $78 7%
Miscellaneous  $76 7%
Other housing  $73 7%
Healthcare  $73 7%
Rates  $64 6%
Private transport  $64 6%
Eating out  $52 5%
Energy  $48 4%
House contents & services  $44 4%
Drinks & cigarettes  $41 4%
Telecommunications  $33 3%
Clothing  $32 3%
Vehicle purchase  $30 3%
Public transport  $29 3%
TOTAL  $1,096 100%

Understanding much you spend, and where, is a really valuable exercise for planning your retirement.  Its well worth categorising all of your spending every month, for at least 6 months, to get a handle on where your money is going.  It’s not as painful as it seems – there are lots of online tools and apps that can semi-automate the categorisation process.

Knowing what you spend on food, drinks, eating out, holidays, clothes, education, mortgages, etc is quite enlightening.  The outcomes might surprise or even shock you!  It also helps to break down necessities v luxuries, spending on yourselves v children, etc, and is vital information for working out what is a realistic level of expenditure for you when you do retire.


Dean Edwards


PS. The Retirement Expenditure Guidelines 2016 can be found here.


Spending in retirement