How much money do you need to stop working?

How much money do you need to stop working?

Dreaming of the day you can give up work and retire? You better make sure you've got enough in the bank.

Brenda Ward, Editor of JUNO investing magazine, says people are often surprised to find that at first, you might need as much money in retirement as you're earning now.

"I've spoken to many people who panic in the first five years of retirement when they discover how much money they're spending on trips or renovating the house. Some have sleepless nights worrying that they'll run out of savings when they're in their 70s."

Simon Hepple, a wealth adviser at Pie Funds Management Limited, agrees. He says many people don't realise they may have to keep working for longer to afford life in retirement.

He says the income you need in retirement will be affected by your goals, spending, income, assets, and your New Zealand Superannuation income.

It's likely to be pricier at the start

"The most important issue is what you envision spending in retirement. In my experience, this question should be broken into two parts," says Mr Hepple.

"If retirement happens before or slightly after 65 years of age, I find that most clients want to travel and see the world, maybe buy a motorhome or boat, spend time with the grandchildren, and generally do everything that wasn't possible while they were in the workforce."

He says this busy lifestyle stage can go on for 15 years, or longer.

"Generally, outgoings in this period are similar, if not higher, than when you were in the workforce.

Then you'll begin to slow down

He says the second stage of retirement is usually from around 75 to 80 years of age onwards, although this differs from person to person.

"Eventually, you'll get sick of the long-haul flights to Europe – and the boat, motorhome and bach will be used far less frequently, if at all, because you'll prefer to do things locally.

"This is generally a cheaper stage of retirement in most cases, if the medical costs are not sneaking up already."

Most people will get NZ Super

Mr Hepple says most Kiwis will get regular payments of New Zealand Superannuation.

"We have universal superannuation in New Zealand, which provides a regular income after you reach your 65th birthday. This also means that you receive this, regardless of assets and even whether you leave the workforce."

New Zealand Super gives you an income of $20,290pa if you're on your own, or $31,215 for a couple, assuming you're both over 65 years of age.

NZ Super is unlikely to offer any more than a 'no-frills' retirement. If you have savings invested, or a KiwiSaver account, these earnings will top that up.

What's your number?

Although people will want to know the exact amount needed for retirement, there is no overall answer.

"The truth is that there's no one number that fits every situation," says Mr Hepple.

Once you've worked out your likely spending in retirement and potential income from all sources, you'll know what your shortfall is.

"You must make an allowance for inflation and allow for a generous life expectancy to ensure that you cover some other key risks too." has handy calculators to work out what you might spend in retirement and what you could earn from KiwiSaver investments in retirement.

This article was created for JUNO investing magazine, a quarterly publication that makes investing simple.

DISCLAIMER:JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions. This story reflects the views of the contributor only. Content comes from sources that JUNO considers accurate, but we do not guarantee that the content is accurate. Simon Hepple is an Authorised Financial Adviser and a disclosure statement is available on request and free of charge at