At this stage you don’t need a sophisticated model or debates about investment returns, inflation, tax or longevity risk. Those topics have their place, but if you haven’t first worked out whether your retirement is viable, they are largely irrelevant.
What matters is understanding how your retirement is likely to stack up – and what levers you still have to improve it.
A helpful way to think about retirement planning is like a game of cards. Life deals you a hand, and your job is to play it well. And like any good card game – whether it’s gin rummy, euchre or five hundred – the first step is simply to pick up the hand you’ve been dealt and understand what you’re holding.
Hannah McQueen. Photo / Michael Craig
Understand the hand you’ve been dealt
The first step in retirement planning is understanding what resources you will actually have available when you stop working.
You don’t need actuarial modelling to do this. A rough estimate is usually enough to tell you whether you’re broadly on track or rowing in the wrong direction.
Start with your KiwiSaver balance. Most providers estimate what it might look like at age 65, or you can use one of the calculators available through Sorted.
For many New Zealanders approaching retirement the numbers are modest. Public data suggests roughly half have KiwiSaver balances of less than $70,000.
Add any other savings, investments or equity in investment properties you expect to accumulate before retirement. For many people there isn’t much outside KiwiSaver, but it’s still worth including whatever exists – even expected inheritances.
This exercise isn’t about precision; it’s about gaining a sense of direction.
If you estimate you will have $70,000 saved by retirement, the next question is how long it needs to last. While no one knows exactly how long they will live, I generally use age 90 as a planning marker. It’s slightly conservative, but far safer than assuming the opposite.
If you retire at 65 and live until 90, your savings need to stretch across roughly 25 years.
Spread $70,000 across 25 years and it adds about $53 per week to your retirement income.
That simple calculation doesn’t solve the problem, but it does highlight the reality. For most people, retirement savings alone won’t deliver a luxurious lifestyle – which makes it even more important to understand the role they will play.
Call a spade a spade
Once you understand the hand you’ve been dealt, the next step is to be honest about the implications.
Research shows many New Zealanders run out of retirement savings 10-15 years before they run out of life. Some people have retirement plans, but most do not.
New Zealand Super currently provides about $540 per week after tax for a single person ($868 for a couple). Add roughly $53 per week from an average KiwiSaver balance and total income rises to just over $600 per week.
That’s not nothing, but it’s a much smaller financial life than many people are used to.
For context, I spent $280 at the supermarket last week – before accounting for fixed costs or discretionary spending.
If you’ve never lived on a $600 weekly budget before, the adjustment can feel uncomfortable quickly. Financial pressure rarely stays confined to spreadsheets – it often shows up as stress, insomnia and anxiety.
Calling a spade a spade means asking one simple question:
What does my life cost each week, and how does that compare to what I’ll receive in retirement?
The difference between those numbers is the gap your retirement plan needs to solve.
Until you understand that gap, debates about investment strategy, use of leverage or inflation forecasts are mostly noise.
Know your trump cards
In most card games there is always a trump card – a resource that can shift the outcome of a hand when played well.
Retirement planning has its own version of trump cards. They are less obvious, but they can dramatically change the trajectory of someone’s retirement.
For most people approaching retirement, there are four key levers.
1. Working longer
Retirement is often treated like a finish line, as though turning 65 means work should stop completely. In reality, transitioning gradually out of work is often healthier both financially and psychologically.
Continuing to work – even part time – means you keep earning, keep saving and delay drawing down your investments. At the same time, the period those savings need to last becomes shorter.
Beyond the financial benefits, work also provides structure, purpose and connection. Retirement shouldn’t feel like falling off a cliff. Ideally it should feel more like walking down a ramp.
2. Downsizing well
For many New Zealanders, the family home represents their largest asset and biggest opportunity to turn their retirement projections around. Too often this card is played late and poorly. Instead of transforming your retirement plan, data from the Financial Services Council suggests it adds a few years to your retirement savings. That doesn’t make it irrelevant – but it usually could have done more if you played your cards differently.
3. Investment planning
Once you understand the size of the gap you are trying to close, investment strategy and liquidity management become useful tools. But investment decisions only make sense once the underlying problem is clear.
Otherwise, they are simply part of the noise.
Downsizing well and investment planning are important to get right. We will delve into the science behind each in future articles.
Play the hand well
Retirement planning sits alongside uncertainty – illness, unexpected costs, family changes or simply living longer than expected. Sometimes the joker is that your kids need a hand financially. It’s good to be generous, but that generosity should sit on top of security, not replace it.
The earlier you examine your numbers, the more options remain available. More time to save. More flexibility to adjust your plan. More opportunity to use the trump cards available to you.
Delay the conversation and those options gradually disappear.
Retirement planning isn’t about perfect modelling. It’s about understanding the hand life has dealt you and deciding how to play it.
Start by understanding what you will likely have. Call a spade a spade about what your life costs. Then identify the trump cards that can still change the outcome.
Clarity creates confidence.
And as any good card player knows, winning rarely comes from being dealt the perfect hand – it usually comes from playing the one you have a little better than everyone else at the table.
Hannah McQueen is the founder of EnableMe and Age Brightly, and the host of The Next Bit podcast.