{"id":47897,"date":"2024-12-18T21:06:20","date_gmt":"2024-12-18T08:06:20","guid":{"rendered":"https:\/\/milfordasset.com\/?p=47897"},"modified":"2025-09-18T21:08:53","modified_gmt":"2025-09-18T09:08:53","slug":"nzs-retirement-breaking-the-problem-down","status":"publish","type":"post","link":"https:\/\/milfordasset.com\/insights\/nzs-retirement-breaking-the-problem-down","title":{"rendered":"NZ\u2019s retirement – breaking the problem down"},"content":{"rendered":"

This article was first published in NZ Herald<\/a><\/sup><\/p>\n

What Kiwis can do at age 54 for a comfortable future after 65.<\/strong><\/p>\n

Kiwis are being urged to think ahead and take control of their financial future by putting more focus on the \u201cpre-retirement\u201d phase.<\/p>\n

Phil Morgan Rees, head of wealth management at Milford, says the decisions made during the final decade before retirement can help turn retirement dreams into a secure and sustainable reality.<\/p>\n

\u201cThis ten or so years is usually called the \u2018pre-retirement phase\u2019. It starts for most people at around age 54 and is about developing a clearer idea of how much they will need in retirement and how long it will last, well before they hit age 65, so they\u2019ve got time to attack what\u2019s left of the earning and accumulation period.\u201d<\/p>\n

For many there is a gap between the state pension and anticipated living costs, and Morgan Rees says one way people are managing it is to continue working (44% of Kiwis aged 65 to 69 still do, which is a higher percentage than that of comparable countries such as Australia and the UK).<\/p>\n

There are some estimates that a couple living in one of NZ\u2019s big cities today will need close to $1 million to retire relatively comfortably. When it comes to a single person, the 2023 New Zealand Retirement Expenditure Guidelines produced by Massey University shows that a one-person household living in a metro area with a \u2018no-frills\u2019 lifestyle will spend approximately $43,000 a year, or $826 per week. This compares to NZ Super for a single person living alone of $496 per week*.<\/p>\n

\u201cIf you consider we are living longer, then when people retire, they are potentially looking at anywhere between 20 and 30 years to cover their needs over and above income from NZ Superannuation,\u201d Morgan Rees says.<\/p>\n

\u201cNo one knows how long they will last, which in the industry we call \u2018longevity risk\u2019. Someone turning 65 this year as a male will likely live to 86 and a female to 88; so, at 65, you\u2019re planning for a 20-year-or-so period, but more likely anywhere between 20 and 30 years.\u201d<\/p>\n

Morgan Rees encourages Kiwis take a step back and think of planning for retirement as being in three stages, the first of which is about accumulation of assets. \u201cIn our world that\u2019s KiwiSaver or investing in KiwiSaver. There\u2019s a bit of history with New Zealanders putting all their eggs in one basket which is property, but a diversified plan would include KiwiSaver and could include investments outside of a KiwiSaver too. It\u2019s good to diversify your risk and advantageous to have liquidity for when you may need it.<\/p>\n

\u201cThen we get to about 54 \u2013 that\u2019s the pre-retirement phase, or second stage. From around 65 on it\u2019s the third stage of planning how to use those assets, called variously drawdown, distribution or decumulation.<\/p>\n

\u201cDrawdown can be a challenging thing to go through, to say \u2018I\u2019m spending this, I\u2019m never going to have it again\u2019, which is why speaking to an adviser to model cash flows and see what they look like is a good thing.\u201d<\/p>\n

After the three stages of accumulating, planning and commencing decumulation, Morgan Rees says, there are often different phases of spending in retirement.<\/p>\n

\u201cThe early years tend to be more active and therefore there\u2019s often more spending. You can equate it to \u2018well, I\u2019m doing a lot more travel, I\u2019m spending time with the family who might be in (Australia) and that costs a lot more\u2019.<\/p>\n

\u201cThen you\u2019ve got the middle period, which is more of a simpler rhythm and spending is lower, before the latter years of retirement where attention can turn to spending in other ways such as making sure there\u2019s money for health care needs, over and above state provision or subsidies, if needed.\u201d<\/p>\n

He says the earlier people start thinking about these issues, the better positioned they will be.<\/p>\n

\u201cA plan is really good. That last phase (retirement) can be daunting and while no-one can give absolute certainty, having a plan helps create an element of certainty, an element of control.<\/p>\n

\u201cYet a plan is only as good as the planning; the planning is the most important feature. It starts by careful consideration of your own expected spending on things that are regular as well as things that are not regular such as holidays, travel, replacing cars, home renovation or giving money to the kids.\u201d<\/p>\n

Morgan Rees says in the case of modelling your long-term cashflows all possible income streams should also be considered: \u201cWill there be any inheritance, do I have assets like a bach or a rental I wish to dispose of at some point?\u2019 All those things can be considered, thought through and planned as options to identify a sustainable future.\u201d<\/p>\n

He advises people think about matters beyond just financial issues, too.<\/p>\n

\u201cLife change is a big deal. \u2018I\u2019ve spent 40 years, let\u2019s call it, going into an office, and if I stop doing that what am I going to do\u2019?<\/p>\n

\u201c\u2018What\u2019s my purpose going to be? I\u2019ve got a lot of energy and I\u2019m very active, so where\u2019s that energy going to go?\u2019 These are really important topics for people to consider of which money is often the enabler,\u201d Morgan Rees says.<\/p>\n

\u201cThere\u2019s a lot to go through, so the more help you can get with financial advice, looking at the long term, modelling your options and how things can be achieved, the better it is.\u201d<\/p>\n

*Source: Work and Income New Zealand. NZ Super and Veterans Pension rates as at 1 April 2023. Single, living alone, Net weekly rate (after tax at \u2018M\u2019). workandincome.govt.nz\/products\/benefit-rates\/benefit-rates-april-2023.html<\/p>\n","protected":false},"excerpt":{"rendered":"

This article was first published in NZ Herald What Kiwis can do at age 54 for a comfortable future after<\/p>\n","protected":false},"author":52,"featured_media":43039,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"ep_exclude_from_search":false,"footnotes":""},"categories":[850,783],"tags":[840],"media_type":[701],"fund_category":[],"class_list":["post-47897","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-retire-well","category-private-wealth","tag-masterclass","media_type-read"],"acf":[],"yoast_head":"\nNZ\u2019s retirement - breaking the problem down - Milford<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/milfordasset.com\/insights\/nzs-retirement-breaking-the-problem-down\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"MAM\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/milfordasset.com\/insights\/nzs-retirement-breaking-the-problem-down#article\",\"isPartOf\":{\"@id\":\"https:\/\/milfordasset.com\/insights\/nzs-retirement-breaking-the-problem-down\"},\"author\":{\"name\":\"MAM\",\"@id\":\"https:\/\/milfordasset.com\/#\/schema\/person\/f1d0ca8b4295df91c529dc366431f417\"},\"headline\":\"NZ\u2019s retirement – breaking the problem down\",\"datePublished\":\"2024-12-18T08:06:20+00:00\",\"dateModified\":\"2025-09-18T09:08:53+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/milfordasset.com\/insights\/nzs-retirement-breaking-the-problem-down\"},\"wordCount\":954,\"publisher\":{\"@id\":\"https:\/\/milfordasset.com\/#organization\"},\"image\":{\"@id\":\"https:\/\/milfordasset.com\/insights\/nzs-retirement-breaking-the-problem-down#primaryimage\"},\"thumbnailUrl\":\"https:\/\/milfordasset.com\/wp-content\/uploads\/2024\/12\/NZs-retirement-break-desk.jpg\",\"keywords\":[\"Masterclass\"],\"articleSection\":[\"Retire Well\",\"Wealth Management\"],\"inLanguage\":\"en-NZ\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/milfordasset.com\/insights\/nzs-retirement-breaking-the-problem-down\",\"url\":\"https:\/\/milfordasset.com\/insights\/nzs-retirement-breaking-the-problem-down\",\"name\":\"NZ\u2019s retirement - 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