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Private savings

For most people, there will be a gap between the annual income that New Zealand Superannuation provides, and the annual income they want in retirement. This gap needs to be filled by their own private sources of money.

Basically this comes down to either:

  • Savings - income from private pensions, investments, annuities and cash deposits
  • Employment - you may be able to work part time, or continue your own business. Think carefully about whether you'll be able to earn income through paid work or business activity. Do you have the skills that will let you work when you want? What if you have to stop working because of ill health?
  • Gifts and inheritance - be conservative, circumstances can change quickly.

Most people end up relying on New Zealand Superannuation and their own savings for retirement income.

Can't save?

Even if you can't save regularly, try to put aside a few dollars to build up a small nest-egg. Even $10,000 or $20,000 in the bank when you retire will make a big difference.

The total amount of private savings you need will depend on whether you want to use just the income (such as interest) from your savings, or whether you intend to use interest and part of the lump sum (capital).

If you want to use only the interest, and leave the lump sum intact, then you'll have to save a lot more.

For many people this is not realistic - the amount needed is just too large. If you're worried that by using your capital you might become totally or substantially dependent on NZ Superannuation, you might want to consider using some of your capital to buy a lifetime annuity.

Some people like to leave an inheritance for the kids. That's a personal decision over and above planning for your own retirement.

 
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