How much is NZ superannuation?

Picture this: After a long career of working, paying taxes, and commuting to the office – you've made it. You're 65, and it’s time to get your superannuation.

But how much money will land in your bank account each week?

Many Kiwis struggle when they retire, and their income goes down. There is often a big difference between what you earn from your job and what you get on the pension.

In this article, you’ll learn:

• what NZ superannuation is
• how much you get each week, and
• what your life looks like on the pension

And if you have a question, write your questions or thoughts in the comments section below.

How much do I get each week from NZ superannuation?

New Zealand superannuation is a government-provided pension scheme for Kiwis aged 65+.

Here’s how much you get per week (as of April 2023):

• $496 a week for a single person living alone ($25,811 per year)
• $764 a week for a couple ($37,744 per year)

This is after tax. If you earn extra income, the amount you get in the bank could be less.

Do I really need to plan for retirement?

The stats suggest that while Kiwis know they need to plan for retirement, many don’t bother.

Around 1 in 3 Kiwis don’t think they’ll have enough for retirement, according to Sorted.org.nz.

About 40% of Kiwis above 65 have no income other than NZ super; another 20% only have a little more.

On top of this, the number of retirees who have paid off their mortgages is falling.

In 2007, 78% of people over 65 had a debt-free home. That fell to 72% in 2017. That trend is continuing, according to the Retirement Commission.

So many Kiwis are caught short. That’s why it’s essential you create a retirement plan while you have time.

Why can’t I just live off the pension?

NZ Super doesn’t give you enough money to pay for everything you need in retirement.

That’s according to the latest NZ Retirement Expenditure Guidelines report by Massey University.

For instance, according to the report, a “no-frills” lifestyle costs $781 a week. That’s for a single person living in Auckland, Christchurch or Wellington.

But NZ Super was only $463 a week when the report came out.

So the average person living alone would be $318 a week short if just relying on the pension.

Think of it another way. Let’s say you earn $70,000 from your job. In that case, you’re used to taking home a little over $1000 per week (after tax).

You’ll have to cut your weekly spending in half when you stop working (and go on the pension). That’s if you spend everything you earn.

This is because a person living alone only gets $496 a week in their bank account. It isn’t a lot of money.

So if you plan to live off the pension (with nothing else) you may need to prepare to spend less. Way less. For most Kiwis, that’s not possible.

What does it cost to live in retirement?

How much you need to spend in retirement depends on the lifestyle you want.

Are you happy living on a strict budget? Or would you rather spend your retirement on lots of overseas holidays?

Do you like to cook at home? Or would you rather eat out at restaurants?

The latest research says that even a “no-frills” lifestyle costs $781 a week. That’s for a single person living in a main city.

For a couple wanting a “choices” lifestyle in retirement, you'll need $1,578 a week.

Generally, there are three types of lifestyle:

• The No-Frills lifestyle (spending around $31.5k – $45k per year)
• The Choices lifestyle (spending around $53.5k – $76.5k per year)
• The Affluent lifestyle (spending around $107.5k+ per year)

You might wonder what life actually looks like on these different lifestyles.

What does life look like with a Choices lifestyle vs Pension?

As part of Massey University’s research, they release budgets. These give a guide on how much you can spend in retirement.

According to this, if you live off the pension, a couple can spend about:

• $17.50 a week on fruit and vegetables
• $12.30 on alcohol
• $23.88 on cafes and restaurants.

But if you’re on the choices lifestyle, you can spend about:

• $39 a week on fruit and vegetables
• 34.60 on alcohol
• $90 on cafes and restaurants.

Watch this video to see what you can buy with that money:

Will NZ Super still be around in 20 years?

There’s a good chance superannuation will change at some point.

For example:

- The age you can get NZ super may go up to 67 (or higher)

- Or it could be “means-tested”. So, if you have lots of money you might not be able to get it.

That’s because NZ Super is becoming more expensive. Soon it could be unaffordable for our country because:

#1 – Retirees are living longer

In 1983 the average Kiwi lived until 74.

Today – 40 years later – the average person lives to 83. That's 9 years longer.

In another 40 years (2063), it’s forecast to grow to 88. That means the average Kiwi will live another 5 years.

In 1983, if you retired at 60 and died at 74, you got NZ Super for 14 years.

If nothing changes, by 2063 the average Kiwi will get NZ Super for 23 years.

#2 – There are fewer workers to pay for each retiree

Most Kiwis think they pay for their own retirement. The idea is that you pay taxes while working, which the government saves to pay your pension. That’s not how it works.

Today’s workers pay for people in retirement. This means when you retire, the workforce at the time will pay for your pension.

But today, women are having fewer babies. On top of this, our population is aging. That means there are fewer workers per retiree. So not only are super annuitants more expensive, there are fewer people to pay the bill.

How should I prepare for retirement?

This article isn’t designed to be negative. Instead, it’s to encourage you to think about your retirement.

The blunt truth is that for many Kiwis, NZ Super will not give you the retirement lifestyle you want.

The good news is there are things you can do to improve and make more money.

For instance, you may contribute more to your KiwiSaver. Or, you might start to save more. But many Kiwis also turn to property investment.

While NZ Super gives you a safety net for retirement, it shouldn’t be your only strategy.

Especially since the government might take it away or change it so you’re not eligible.

Many Kiwis we work with don’t even factor NZ Super into their retirement plan. They aim to have enough money to look after themselves in retirement.

That way, if the programme changes, they’re not affected. If it’s still there, it’s a nice bonus.