How Much Do You ACTUALLY Need to Retire in NZ? 2026 Breakdown.

Could you retire on $50K a year?

Daniel: Welcome back to another episode of the Blueprint Finance podcast, where we give everyday Kiwi the good oil on how to better manage their personal finances. Today we're talking retirement — things like the 4% rule and the different tiers of retirement. Because the big question is, "Look, I want to invest in property," or "I want to own a home," or "I want to protect my finances" — but to what end? It's a super important part of goal setting.

Daniel: So what's actually realistic around retirement? We're going to crunch a bunch of numbers in this episode, and I'm going to base it off the information we've been prescribed by the New Zealand government. Sorted.co.nz — it's run by Te Ara Ahunga Ora, the Retirement Commission — has all the numbers on what they're advising you should aim for as an income in retirement. This is if you retired today. Every year you can expect about 2.5% inflation, so these numbers would go up by 2.5%, but we're just going to base this off today's numbers. A lot of people might hear these numbers and say, "That's not that much," or, "That's a lot." And it's all after tax — every number we'll be talking about is after tax, so it's usable net income.

Daniel: They've given us a really nice framework: three tiers of retirement lifestyle that you can afford based on the income you're going to have. For context, we're looking at a married couple, or just a couple in a partnership. The first tier they refer to as a bare bones retirement — $50,000 per year. If you're getting $50,000 a year, you're going to have quite a bare bones retirement. A caveat as well: this is not including your living costs, which we'll come to a bit later. It's just talking about funding your lifestyle — your groceries, running a car maybe, occasional entertainment — and the assumption is you're mortgage-free, or you've got supplemented household income, maybe living with family, something like that.

Daniel: On $50,000, it's suggested it's not going to be a very luxurious life. You're not taking cruises to the Caribbean, you're not getting front-row tickets to the Robbie Williams concert. You're limited in what you're doing. Super's going to cover $44,400 of that, so we're only needing to top up $5,600 per annum.

Rory: So for the bare bones retirement, based on what Sorted is recommending, you'd only have to top up $6,000. But we need to take this with a grain of salt, right? How can we actually know if $50K is going to do the job? The only real way to understand that is to put things into practice. Think about your own situation, think about the life you want to live when you retire, and think about whether you'll be okay with that. To be honest, $50K in my mind sounds like a bit of a rice and beans situation. It sounds like you have to think twice before seeing the new Spider-Man movie.

What $75K a year gets you in retirement

Daniel: Another great point is where you choose to retire, which we'll come to as well a bit later on. So that's the first recommendation, the bare bones. Now we're going to bump up. You're putting the rice and beans away, and you're now considering the Gold Card movie tickets and maybe a couple of presents for the grandkids on Christmas and birthdays. We're moving to modest and comfortable, and for modest and comfortable we're bumping up by $25,000, to 75 grand a year — net income.

Daniel: So now we've got a bit more freedom and choice. We can maybe run a vehicle — still probably a bit of an old bomb, but like all of us, we can make do. An occasional overseas holiday, maybe — that's probably a Rarotonga or Australia holiday — and helping out with the grandkids. The gap between NZ Super and that is just over $30,000.

Rory: I didn't realise in bare bones we weren't running a vehicle.

Daniel: This is the reality for a lot of Kiwi.

Do you need $100K a year to retire well?

Daniel: Now we're going to bump it up to what's called the choices lifestyle. They've put a band for choices, between $90,000 and $100,000, but we're just going to call it $100,000 — because with some of the things they've put in here, I'm going to say you need 100 grand net income a year to do this. Now we're talking regular travel — once a year you're going on a holiday, and maybe once every four years you're actually doing that Pacific cruise. We've got hobbies — the pickleball membership, that's pumping. We're maybe driving a slightly nicer vehicle, more comfortable, maybe an SUV. And we're less worried about sudden expenses. A lot of New Zealand households — most New Zealand households — are running on less than 100 grand net income a year.

Rory: For someone who's not raising kids, it's a very, very good income. That's a massive income in retirement.

Daniel: So that's labelled the choices retirement — anything above $100K in today's money, net income, would be considered a choices retirement based on the retirement agency. And the gap for that is $55,600. That's a pretty solid gap — we've added another $25K, and it's getting pretty significant. You're thinking about filling that gap with either investments, rental income, or just saved cash.

Daniel: Something we consider is that retirements are a long time — but for most Kiwi these days, you're pretty darn active for the first 15 years of it. You're probably running a pretty similar life to your last 15 working years — from 50 to 65 you're in the car, fully functioning, a contributing member of society.

Rory: That's right — there are only so many nights a week you can go to the bridge club and knit slippers. And as a disclaimer, we're not taking the piss out of retirees. We can't wait to do this stuff.

Daniel: It's really important to have an idea of what's needed to be comfortable. And look, these numbers are big — the choices number is big — but it's not impossible. We're actually going to talk about how you get there.

Retiring in Auckland? Add another $30K

Daniel: So what's happening with rent, or the mortgage, or living expenses? Something that's mentioned in these retirement forecasts is that if you haven't got to a position where you've got a paid-off house, or where you can live rent-free with family, we're going to add something called the renter tax, or the mortgage tax, on top of this requirement. As a standard, we're putting a $20,000 net renter tax on these goals if you're in regional New Zealand — outside a major city, say Gisborne, Whangarei, Whanganui, population less than 50,000, where housing's more affordable and the related cost of living is slightly cheaper as well. If you're living in Auckland, it's a $30,000 renter's tax, assuming you're renting a whole unit to yourself — because it's not cheap to be part of this booming metropolis.

Rory: I mean, why would you be here if you're retired? Get out there in the regions.

Daniel: That's the thing — so many people leave and retire to different areas.

Rory: Can we go north, north, north and get some cheap prices?

Daniel: Oh, 100%. Way north of Whangarei, north of the Bay of Islands. You can sell up and either just be cashed up and rent cheaper, or buy a very cheap property up there and free up the cash — that extra money we're going to fill the gap with. So keep that in mind — we would add that. For example, if you wanted a choices lifestyle and you lived in Auckland, your goal would be $130K, not just $100K. Making a plan to be mortgage-free, or to neutralise your living costs, is one of the best things you can do for your financial future.

Rory: If you end up in a situation where things are looking tight, living that bare bones retirement mortgage-free — topping up $5,600 — seems quite achievable. But if you don't own your own home freehold, then you've got to add another $20K to that.

Daniel: It's huge.

The 4% rule explained

Daniel: Now let's talk about the two options you've got to bridge this gap, and we'll use the $75K lifestyle as our example. Option one is save and spend: we save the difference, and once we retire, we spend it. This one is a really basic, easy-to-figure-out calculation, but there are some risks. The major risk being: what if there are some large unexpected bills, and you have to spend a lot more of that nest egg? And the second: how long are you going to live? Retirement age is 65, modern medicine is getting incredible, and we're literally watching the average lifespan increase year on year. Can you realistically budget for 25 years, or do you need to do 30 years, or 35?

Daniel: The second option is never run out. This is alluding to something that you and I love to talk about — the 4% rule. It's the idea of living off an investment portfolio. The concept is that on a million dollars of debt-free cash, you can safely withdraw 4% of it every year. This has been tested in every single investment market — even if you retired into the worst possible markets, like the 1929 crash, you would still not run out of money, and you'd be able to withdraw 4% of that portfolio every year.

Why the number is $765,000

Daniel: So if we're talking about that $75K modest goal, we were topping up Super by $30,600. 4% on $1 million is $40,000, and you're comfortably never running out. For this example, the 4% we need is $30,600 — and $30,600 as a 4% would be $765K. If you had $765K invested — 60% shares, 40% fixed income assets — then you can use the 4% rule. Obviously you're having faith in the market, but the numbers have been done — the backtesting says you'd be able to rely on that money coming in.

Daniel: You can do monthly drawdowns, which is just selling off the amount you need each month, and then supplement the additional money required with your Super, hit the $75K, and ride into the sunset.

Rory: Love it, mate. That's absolutely achievable. If you're a couple, you're thinking you've got to get 380 grand each in your KiwiSaver, or—

Daniel: Yeah — or in your investment properties, and be freehold. And you can live a pretty comfortable retirement. That is definitely what I would recommend.

Rory: Well, clearly.

Daniel: And it's what I would go for, rather than the nest egg. Some people are drawn to the nest egg because it doesn't require relying on a market, which I totally understand — inherently there is a risk in everything.

Will NZ Super even be around?

Daniel: I was talking to our producer Jackie yesterday about this episode, and she was saying, "I heard you say the other day that Super might not be around when we retire." And I'm like, "Well, that's true." If you look at just the numbers — this aging population idea that's prolific in some more advanced countries like Japan — the working force is forecast to be so much smaller because of the declining birth rate. When we get to retirement, people are going to be living way longer, there are going to be so many more retirees, and so much less tax revenue in comparison to what we're earning today.

Daniel: So unless we get a massive influx of working people — which these days seems not too likely, with a bit of pushback on immigration and slow net migration; people aren't rushing here to work — we're going to have to either borrow money to pay for Super, or we're going to have to change it. Means test it, or increase the retirement age to 70 or something.

Rory: That would be horrible if we end up going down that road — especially means testing. I'd rather open the borders up and really try to make New Zealand attractive and get the workforce in.

Daniel: 100% agree. We don't want to be borrowing money, and we don't want to be taking those benefits back from hardworking Kiwi in their twilight years. You want your country to thrive, but at the same time, I want to know my people are going to be looked after in retirement. I'm happy to pay taxes knowing a lot of it goes to pensions, because they've built this country. They deserve a good retirement.

Rory: Something's got to change, and hopefully it's stimulating the economy.

Daniel: There's risk either way. You could go all in on the 4% rule and push it even higher — say, "What if I want such a comfortable retirement that I don't even rely on this pension income?" You can put in even more, so you'd need an extra million to cover that 40 grand. And the great thing about this — which is otherwise the really difficult part of retirement planning — is inflation. The 4% rule adjusts for inflation automatically. It's brilliant. The reason it's 4% and not 5% or 5.2% is that every year it adds 2.5% on top of what you can withdraw. So the $30,600 would increase by 2.5% the following year — automatically adjusted for inflation, and still within that safe withdrawal rate range.

Rory: You bear risk with the 4%, but in my opinion the numbers around it are an incredible piece of financial science.

Daniel: You'll start your 4% journey, and in the first couple of years your principal — your portfolio balance — drops a lot because the market just tanks. Still taking out 4% obviously feels a bit scary, because it's like, holy crap, I'm just going to run out of money. But then naturally, after six or seven years, the market recovers and you end back up at your principal amount. And if you're more risk-averse, you could have that little bit of extra in savings and still live by the 4% rule — you've built in a buffer.

Rory: Like, for example, if you had a million dollars you could draw down 3% — another way of dampening some of the risks, right?

Daniel: Exactly. That's a way to give yourself real confidence you'll go the distance. In weaker years, use some common sense — in bear markets you're taking 3%, and then maybe in bull markets you're taking 5%.

Rory: I'd certainly like to have choices in my retirement, if possible. Depends on what my financial adviser, Daniel Lipman, thinks can be done.

How to work backwards from your retirement goal

Daniel: So how do you actually get there? We've identified that for this individual we're going for $75K a year — comfortable. Number one: pick the lifestyle. We'll pick comfortable. Number two: subtract the expected Super. We just used today's Super, $44,000, so the gap to bridge, we understand, is $30,000. Then we want to adjust for inflation. We're not going to adjust Super — we'll assume that gets adjusted itself — and there are heaps of ways to do it. You can literally plug it into Google AI — "What's this money worth in 25 years?", or whenever you plan to retire — and it will tell you exactly.

Daniel: Then work backwards using the 4%. For the example we looked at today, it's $765,000 — so work backwards: how am I going to get there? Work out an investment contribution. Even if you say, "Okay, we can just handle this with our KiwiSavers — we're in our 40s, we can get there with our KiwiSavers," figure out if the income you earn is actually going to get you there. Maybe you have to increase your contributions to 6%, 8%. You can gamify it that way. Or maybe that's not going to get you there, and you want to do a bit extra with your investment portfolio — you and your partner start up a fund, one grand a month. That's probably going to help.

Rory: Or use your equity and buy an investment property.

Property vs shares? Do both.

Daniel: There you go — that's my opinion, and that's what I'm doing: a blend. I think the power of compound interest with your investments can't be ignored, so I'm definitely not just all in on real estate. But I think using real estate is really important, because like I said before, inflation erodes debt. If you can find really good properties with good rental income to service the debt, that's going to help you a lot.

Daniel: And then the big thing — the last question — is: do I want to be mortgage-free or debt-free, and how am I going to get there? If your retirement's 20 years away and you're on a 25-year loan term, we've either got to increase our repayments or find other ways to pay it off faster. Can I incorporate a revolving credit facility to somehow offset my interest and pay more principal? Am I going to sell the house when I retire and downsize to two bedrooms? All these things you can do, which are going to get you there.

Rory: One thing on inflation, because we didn't touch on it earlier: the numbers we've been given are today's numbers. If you're planning on retiring in 30 years, the numbers are much larger.

Daniel: The numbers are a lot bigger. So when we go, "Oh, you need $765,000 to retire comfortably" — you need that today. Everything's going to be costing up the wazoo in 20 years' time.

Rory: Look, it is a scary number, but it's more than doable with a plan.

Daniel: That's why you need a plan — because it is a big number. Your KiwiSavers are going to do a lot of this heavy lifting — the compounding effect. If you're in an active growth fund, you're getting a double-up every seven years, based on prior returns.

Daniel: So that's pretty much it. We've got some tools in our toolkit — we do a lot of free tools that we give away all the time — so you can download some spreadsheets, or just give one of us a call or send us an email. And if you really want to get serious about this and you want to do it through property investment, definitely get in touch, because we've got some really good case studies and really good ideas on how you can get there.