Retirement, modelled before you live it.
The three pillars of NZ retirement, the NZ Super baseline, the 70 percent rule, decumulation strategy and how fund settings should change as you approach access. Written planning for the years that matter most.
TL;DR
NZ retirement is funded by three sources: NZ Super (the universal pension from age 65), KiwiSaver (the default workplace retirement scheme), and other savings (term deposits, managed funds, property, business equity). Most households need all three. The hardest part of retirement planning is not "how much do I need" but "how do I draw it down without running out." We model both ends of the question.
- NZ Super: universal from age 65, around $530 per week for a single living alone (illustrative, current 2026 rate), paid fortnightly.
- KiwiSaver: usually the largest discretionary pillar, with access from age 65 (some exceptions earlier).
- Other savings: the third pillar that closes the gap between Super + KiwiSaver and the spending pattern you actually want.
NZ Super, KiwiSaver, the rest of the picture.
NZ has one of the simpler retirement income systems in the OECD. Three pillars do most of the work and the names are not coincidental.
Pillar 1: NZ Superannuation. The universal government pension paid to most NZ residents from age 65. NZ Super is taxable but is not means-tested in the conventional sense: there is no asset test and the universal entitlement is not abated for other income (with the limited exception of partners under 65 who are included on the older partner's payment). The amount varies by living situation. The most-quoted figure is the "single living alone" rate, currently around $530 per week (illustrative, 2026 figure to verify against MSD's current published rate). A couple rate, where both qualify, is around $810 per week combined. Rates are updated each April and are pegged to NZ wages.
Pillar 2: KiwiSaver. The opt-out workplace retirement savings scheme introduced in 2007. Contributions are 3 percent, 4 percent, 6 percent, 8 percent or 10 percent of gross salary by the employee, matched by a minimum 3 percent employer contribution. The government also pays an annual "member tax credit" up to around $521 a year for adult members who contribute at least $1,042. Access is at age 65, with limited earlier-access provisions (first home, significant financial hardship, serious illness). KiwiSaver is the cornerstone retirement vehicle for most working-age New Zealanders and the rate of contribution is one of the most leveraged decisions in the plan.
Pillar 3: other savings. Everything outside Super and KiwiSaver. Term deposits, managed funds outside KiwiSaver, residential or commercial property, business equity, inheritance assets, overseas pension entitlements. For most NZ households, pillar 3 is the discretionary savings layer that closes the gap between the standard NZ Super + KiwiSaver income and the spending pattern the household actually wants to maintain. Pillar 3 also gives flexibility to bring retirement forward, retire partially, or absorb a year of bad portfolio returns without cutting spending.
The job of retirement planning is to model how much income each pillar generates at the household's chosen retirement age, identify any gap, and design contributions today that close that gap.
What the universal pension actually delivers.
NZ Super is the foundation. For households where retirement spending is modest, NZ Super alone covers a meaningful share of needs. For most middle-class households it covers somewhere between a third and two-thirds.
Current illustrative rates (2026, to be verified against the most recent MSD update). All amounts are net of tax at the "M" tax code, paid fortnightly:
- Single, living alone: around $530 per week.
- Single, sharing accommodation: around $490 per week.
- Married/civil/de facto, each (both qualify): around $405 per week each, or around $810 per week combined.
Eligibility requires residence in NZ for at least 10 years since age 20, with at least 5 of those after age 50. Time spent in countries with NZ social security agreements (Australia, the UK, Ireland, Netherlands, Greece, Denmark, Jersey, Guernsey, Canada and others) may count toward this. Time in non-agreement countries does not. Clients who have spent extended periods overseas should check eligibility well before they plan to apply.
NZ Super is paid fortnightly into the bank account. It is taxable income and is added to other income for tax purposes. The tax code most NZ Super recipients use depends on whether NZ Super is their main source of income or a secondary source.
One frequently-misunderstood feature: NZ Super is paid from age 65 regardless of whether you are still working. You can earn salary, run a business, draw director's fees and continue to receive the full NZ Super entitlement. There is no work-test on the universal payment. The combined income is taxed at marginal rates.
For the most current published rates, see the Work and Income NZ Super page. For modelling the rate against your specific retirement plan, see Sorted.org.nz, the Retirement Commission's free public modelling tool.
The 70 percent rule, then the gap calculation.
The most defensible rule of thumb for retirement income is 70 percent of pre-retirement after-tax spending. The logic is straightforward: retirement reduces some costs (commuting, work clothes, lunches, mortgage often paid off) but increases others (health spending, leisure, family support). The net is a smaller spending bill but not dramatically smaller. The Retirement Commission's annual Retirement Expenditure Guidelines, produced by Massey University, are the closest NZ has to a published benchmark.
The Massey guidelines, updated annually, publish four lifestyle benchmarks: "No Frills" and "Choices" budgets for both metro and provincial settings, for both two-person and one-person households. As an indicative current range:
- Two-person provincial No Frills: approximately $830 per week (illustrative, verify against most recent Massey publication).
- Two-person provincial Choices: approximately $1,200 per week.
- One-person provincial Choices: approximately $850 per week.
- Metro Choices figures are around 10 to 15 percent higher than provincial.
The gap calculation is then straightforward. Take your target spending. Subtract what NZ Super delivers at your living situation. The remainder must come from KiwiSaver and other savings.
Worked illustrative example. A couple, both 65, both qualifying for full NZ Super, targeting a "Choices" lifestyle in provincial NZ at $1,200 a week. NZ Super delivers around $810 a week combined. The gap is $390 a week, or roughly $20,300 a year. Using a sustainable drawdown rate of around 4 percent per year, that gap requires a retirement asset base of around $510,000. Some of that will sit in KiwiSaver, some outside. If the household reaches 65 with $510,000 across the two pillars, they can fund the target spending sustainably for around 25 to 30 years.
The numbers move quickly with assumptions. Targeting "No Frills" provincial drops the asset base required to around $20,000. Targeting "Choices" metro pushes it past $700,000. Adding a partial work-income for the first 5 to 10 years of retirement also shifts the math meaningfully. We model each household's actual figures rather than relying on a rule of thumb.
How to draw down without running out.
For working life, the math of saving is simple: contribute, leave it invested, watch it grow. For retirement, the math reverses and becomes much harder. Decumulation, the strategy for drawing down savings through retirement, is structurally the more complex problem of the two.
Three common approaches are used in NZ retirement planning.
The 4 percent rule. The original rule, drawn from US data (the Bengen study, 1994), suggests drawing 4 percent of the starting portfolio balance in year one and increasing that amount by inflation each year. On a $500,000 KiwiSaver-plus-savings balance at retirement, that's $20,000 in year one, rising with CPI thereafter. Historic backtests suggest a 4 percent withdrawal rate had a high probability of sustaining a balanced portfolio across 30 years. Some NZ analysts argue 3.5 percent is more appropriate given lower expected forward returns. The rule is a starting framework, not a prescription.
The bucket strategy. Split the portfolio across three buckets by time horizon. Bucket 1: 1 to 3 years of spending, held in cash or term deposits, used to fund near-term withdrawals. Bucket 2: 3 to 8 years of spending, held in conservative/balanced funds. Bucket 3: 8 years and beyond, held in growth funds. Draw from bucket 1, refill it from bucket 2 during good market years, refill bucket 2 from bucket 3 in turn. The bucket structure reduces sequence-of-returns risk: the chance that bad market returns in the early years of retirement permanently damage the plan.
Dynamic spending rules. The withdrawal rate adjusts based on portfolio performance. Common rule: if the portfolio is up by more than X percent year-on-year, increase spending; if down by more than Y percent, cut spending modestly. Dynamic rules sustain a higher long-term withdrawal rate at the cost of accepting some lifestyle variability.
In practice we usually combine elements. A bucket structure for the cashflow, a 3.5 to 4 percent baseline withdrawal rate, and a soft floor on the cash bucket so spending is automatically constrained if returns disappoint. The plan is reviewed annually.
Don't go conservative too soon.
One of the most common KiwiSaver decisions made in the wrong direction is "I'm 60, I should move to a Conservative fund." This is conventional wisdom and it often costs members tens of thousands of dollars over their retirement.
The reasoning behind the conventional view is correct in principle: as you approach the moment you need the money, exposure to volatile growth assets becomes risky. The problem is the assumption that "the moment you need the money" is age 65. For most retirees, age 65 is not the moment of withdrawal; it's the moment of first access. The funds will then be drawn down over 25 to 30 years of retirement, which means the bulk of the portfolio still has a long investment horizon.
A more useful frame is to ask "what time horizon does each dollar of the KiwiSaver have." The first year of post-retirement spending has a 1-year horizon and should sit in cash or conservative. Year 2 spending has a 2-year horizon. Year 20 spending has a 20-year horizon and absolutely should be in growth assets.
This argues for either a glide path that very gradually reduces risk over the decade approaching retirement, or for the bucket structure described above. It argues against a wholesale switch to Conservative at age 60.
In numbers. A KiwiSaver member with $400,000 at age 60, leaving it in a Growth fund for 5 years (assume 6 percent net return), reaches age 65 with around $535,000. The same balance left in a Conservative fund (assume 3 percent net return), reaches age 65 with around $464,000. The difference is around $71,000, or roughly 3 to 4 years of supplementary spending in retirement. Going Conservative too soon is not free.
We review fund settings explicitly at each annual review and adjust based on the household's retirement timing and spending profile.
What financial advice does, and what it doesn't.
Retirement planning and estate planning overlap but are not the same. Estate planning is the legal and administrative work of structuring how assets pass on death or incapacity: wills, trusts, enduring powers of attorney, relationship property agreements, beneficiary nominations on retirement and insurance products.
Wealth Health is not a law firm. We don't draft wills, trust deeds or enduring powers of attorney. We do, as part of a retirement planning engagement, identify which estate documents need to be in place, which need updating, and how the financial assets we manage need to be structured to fit them. We then refer to specialist estate lawyers for the legal drafting.
The most common gaps we find in retirement-age clients' estate setup are: an out-of-date will (often written before children were born and never updated), no enduring power of attorney for property or for personal care and welfare, KiwiSaver beneficiary nominations that haven't been updated since the scheme was joined, and life insurance policies still naming a former partner or a now-adult child as the beneficiary. We work through this checklist in the first planning conversation and flag what needs attention.
For specialist estate planning, we refer to estate-specialist law firms in Tauranga and Auckland. We're happy to make the introduction.
About NZ retirement planning.
How much do I need to retire in New Zealand?
The most useful rule of thumb is the 70 percent rule: you need around 70 percent of your pre-retirement after-tax spending to maintain quality of life through retirement. For a household spending $80,000 a year before retirement, that's around $56,000 a year of post-retirement spending. NZ Super covers part of this; the rest must come from KiwiSaver and other savings. We model the specific gap for each household.
What is NZ Super and who gets it?
NZ Superannuation is the universal pension paid by the government to most NZ residents from age 65. It is not means-tested in the way many other countries' pensions are: there is no asset test and no income test on the universal entitlement. Eligibility requires having lived in NZ for at least 10 years since age 20, with at least 5 of those years after age 50. The amount depends on living situation (single, couple, sharing) and is updated each April.
When should I switch my KiwiSaver to a more conservative fund?
Not as early as most people think. If you're planning to draw down KiwiSaver gradually over 25 to 30 years of retirement, the bulk of those funds still have a long investment horizon at age 65. Many KiwiSavers move to Conservative funds at age 60 and lose meaningful long-term return as a result. A more nuanced approach is to keep most of the fund in Balanced or Growth and only move a "first-five-years-of-spending" bucket to Conservative or Cash.
What is decumulation and why does it matter?
Decumulation is the strategy for drawing down savings through retirement. The risk is not running out of money before running out of life. Common approaches include the 4 percent rule (drawing 4 percent of the starting balance each year, indexed for inflation), the bucket strategy (splitting funds across cash, conservative and growth buckets), and dynamic spending rules that adjust draw-down rate based on portfolio performance. We pick the approach to fit the household's spending pattern and risk tolerance.
Does NZ Super get paid if I have other income?
Yes. NZ Super is universal and is paid regardless of other income, savings or assets. It is taxable, however, so the after-tax amount depends on your overall income. Working full-time after 65 while drawing NZ Super is common and entirely allowed. The only practical income test affects partners under 65: if a couple includes your partner in your Super and they have meaningful income, that portion is abated.
Where can I model my own retirement before booking advice?
The Retirement Commission's free tool at Sorted.org.nz is the best public model in NZ. The "Retirement" calculator there will let you input your current savings, KiwiSaver balance, contribution rate and target retirement age, and project the income you can sustain. It's a strong starting point. For more detailed modelling (multiple income sources, business equity, decumulation strategy), the planning engagement adds depth.
Model your retirement before you live it.
A structured planning engagement covers NZ Super assumptions, KiwiSaver settings, the gap to your target lifestyle, decumulation strategy and an annual review. Written, specific, fee-based.