“You will need extra money for large purchases. e.g. buying a campervan. And if you have any health troubles, you’ll need to go through the public health system.

“Here are the most recent figures for what it costs for the Choices lifestyle: We estimate that if you retired today, you’d need:

The percentage of the population with $1.45 million in savings (including NZ Super top-up presumably) would be tiny in my opinion.

A: I agree that those totals seem way too high. Opes, like other financial providers, gives as a source for its numbers the Massey University Centre for Financial Education, or FinEd – although Opes numbers are higher than FinEd’s, which is hardly surprising given they want to encourage people to invest.

Still, FinEd’s recently announced calculations, on how much people need to save for their retirement while receiving NZ Super, are themselves catching flak for being too high for people in some circumstances. And other research backs up that criticism. More on that in a minute.

The Fin-Ed estimates are for people living in a “Metro” area – Auckland and Wellington Regional Council areas and Christchurch City – and for “Provincial” people, who live elsewhere.

They are also calculated for people who are content to live a “No Frills” lifestyle and for those wanting a more expensive but not luxurious “Choices” lifestyle.

There’s a wide range of savings totals, from $48,000 for a single person living with no frills in the provinces to a hefty $1.142 million for a two-person metro household living with choices. The latter figure, in particular, has raised eyebrows – as has the huge difference between, for example, the Choices Metro savings for singles and couples.

Where did those numbers come from? The researcher, Massey associate professor Claire Matthews, used data from Stats NZ’s Household Economic Survey on how much people 65 and over reported that they spent. So, you could argue, the numbers can’t be challenged.

Enter the NZ Society of Actuaries, which late last year published research on spending through retirement. Their main finding is that New Zealanders spend less and less as they get older – with reduced purchases of clothing, transport, and recreation and culture in particular.

This means that, if inflation is about 2%, retirees don’t need to worry about their spending rising with inflation. Prices rise, but retirees buy less, so the dollar amount of their spending doesn’t change. Therefore, total savings needed at 65 could be a huge 40% less than other estimates.

The actuaries’ report says Massey’s guidelines – based on spending by everyone over 65 lumped together – “will overweight the higher spending of the more numerous newly retired”. About 30% of all over 65s are aged 65 to 69, but only 13% are aged 80-84, 7% aged 85-89 and 4% aged 90 and over. So the younger retirees’ spending will dominate the data Massey uses.

We should note, too, that these days almost half the people aged 65 to 69 are still working, full-time or part-time. And working people tend to spend more – on transport, work clothes, convenience food and so on, and also in many cases on non-essential items because they feel they can afford them. +Read more

Q: I thought I would tell you my story of not being careful with money.

We sold a property in Auckland 10 years ago. We came down to the Coromandel and thought it would be a nice place to live. We bought a two-storey house in a lovely town, which left us with $200,000 in the bank. We had a lot to do in the house, everything was old-fashioned, so we did use up some money making it nice.

My husband had always wanted to go on a cruise, so we did that, but we had to break our term deposit to pay upfront, which cost us $400. Then we wanted to go back to England on a coach trip to see our remaining relations and friends, as well as parts of the UK that we hadn’t seen. We also had a coach trip around Italy.

When our daughter moved to Australia we had a couple of trips over there.

We also had problems with the house – so many water leaks – because the pipes were old. In the end we had to have the pavers dug up and a whole new lot of pipes installed.

In 2018 we were flooded, along with everyone else in our area. We had to renew items that the insurance didn’t cover, and change the carpet up the stairs, plus three rooms, so it matched the downstairs.

Then we realised that the $200,000 had dwindled so much in the 10 years that we had to take out a reverse mortgage in order to live the rest of our lives in comfort. We are in our early 80s.

I don’t know why we didn’t seek the advice of a money expert. I guess, having never had spare money before, we just went a bit mad.

If only we could have that time back again, we would be so much more careful.

A: I’ll probably get shot for saying this, but I don’t think you did much wrong!

Sure, you should have kept better track of your financial situation. And paying a break fee on a term deposit seems a bit silly. Couldn’t you have waited until it matured?

Also, I can’t help but wonder whether it really mattered that the carpet upstairs was different from downstairs. But hey, if it would have kept on annoying you, you did the right thing.

My main point is that it seems you’ve had a good time in the years you’ve been well enough to travel and to see distant family and friends. Quite often, I hear from older people wishing they had spent more in their early retirement.

Now you have a reverse mortgage, which some would frown on. But I think that’s fine, given you’re in your 80s. Unless one of you lives to well past 100, there aren’t all that many years for the debt to compound. And, despite the current trend, house values will surely rise over time, too.

Having that loan does mean you probably won’t leave a large inheritance. But I don’t think that should drive people’s retirement spending.

A note to other readers: My encouragement to spend up large does not extend to younger people, unless you can easily afford it! +Read more

Q: Last week’s letter regarding boys getting the lion’s share of parental financial help really got to me.

We were financially very secure; we put both son and daughter through private schools. Our daughter flew high and finished uni with first-class honours. Our son left school by mutual agreement at just 16. School was a terrible time for him. In his last year he was diagnosed with a learning difficulty, but by then it was too late.

Long story short, he went to family overseas to break bad friendships and habits. He has worked his tail off since then, as has his wife. Kids going into daycare at six weeks etc. Our daughter had a career, met a driven man, married, and two kids later they are very wealthy.

Unfortunately, we lost all of our financial security. It happens. Our big struggle is the little we will have to leave will mean not a lot to our daughter and family, but would be life-changing for our son and family.

Our daughter doesn’t see it that way. She thinks anything we leave should be 50/50. Where do you go with that? Anything less would be an insult to our daughter and cause a rift between them. Her husband will inherit very well. What do I do? It keeps me up at night worrying.

A: I can well imagine. This goes way beyond my expertise, so I sent your letter to Rhonda Powell, a barrister who specialises in trusts, wills, estates, equity and family property.

“Inheritance is a privilege and not an entitlement,” she says.

“Equality does not mean treating people exactly the same. Some people have seen or unseen disadvantages which hold them back. In the letter the son had an undiagnosed disability. He needed extra support to reach the same goal and he missed out.

“There is a useful visual about substantive equality that you may draw on here – have a look online. It has several differently statured people watching a sports match, and some need a higher stool than others to see over the barrier.

“On the private schooling example some children will only thrive in the smaller classes and more structured environment but others would thrive anyway. Parents can help their children to thrive in different ways and at different times, and that is okay,” says Powell.

“I would advise the parents to provide based on their conscience and their children’s needs. Make a gift to each child, but they don’t need to be the same. Make sure the daughter gets at least 20% of the overall estate (to protect against the likelihood of a claim) and include a letter to explain why.”

She adds, “I would never advise to punish a child through reduced inheritance. This is not that scenario.”

A final thought from her: “Or provide some extra lifetime support for the son or his children and then make the will equal.”

The 20% bit got me wondering. “Is that a rule, or just a convention?” I asked Powell.

“The courts used to have ‘rules of thumb’ for estate claims, and the ‘rule of thumb’ was 10% for an adult child of independent means,” she says.

“These days the courts state that the rules of thumb don’t apply, and yet they continue to do it! My suggestion of a minimum of 20% was to err on the side of caution. It would be difficult for an adult child of independent means to succeed in an estate claim if they already got 20% of the estate. However, it’s important for the will maker to consider all relevant circumstances.” +Read more

Q: I’ve recently downsized my house and have money to invest, which I intend to leave until I retire in 10 years. How can I ensure the capital isn’t reduced, but there is some growth?

I’ve looked into term deposits, shares and managed funds, but I’m really confused. Shares feel too risky for the amateur me, managed funds have such high fees, and term deposits don’t seem to have much potential to grow. Is a lump sum deposit into my KiwiSaver an option? Please help.

A: That must be a good feeling – freeing up money for retirement and also having less house to maintain, heat, and perhaps rattle around in.

Putting the money in KiwiSaver is certainly an option. More on that in a minute, but first let’s consider what you’ve looked at.

I agree that term deposits are not ideal for most of the money. By the time the interest is taxed, you don’t get all that much growth over the years. The money might not even keep pace with inflation.

What about shares? I wouldn’t suggest you try to pick individual shares. If you’re really lucky you might do well, but you also might do badly. Even the professionals often get it wrong.

But a low-fee diversified share fund, a type of managed fund that holds many shares, is a good idea. Usually you get considerably higher long-term returns than on term deposits.

Most aggressive and growth KiwiSaver or non-KiwiSaver funds hold largely shares. If you look at these funds on the Smart Investor tool on sorted.org.nz, and click on each fund’s name, you get a summary of what they invest in.

There are two “conditions” for investing successfully in a share fund:

If you’re not sure about coping with volatility, perhaps use a balanced fund. These typically hold lots of bonds as well as shares and will probably be less volatile. However, the returns are likely to be lower – although still generally higher than term deposits.

Once you’ve chosen your risk level, you need to make two decisions.

The first is whether to use your KiwiSaver fund or a non-KiwiSaver fund. The latter will give easy access to your money, but the fees may be higher.

The second decision is about fees. You’re right that some managed funds charge high fees, but others don’t. Do you get more if you pay more?

A recent media report said some higher-fee KiwiSaver providers had reported good returns, so perhaps it’s worth paying extra.

My response: Looking back over any period, whether it’s three months or 10 years, there will always be some high-fee funds that came top of the charts. The only problem – and it’s a big problem – is that nobody knows which ones will keep doing well. The stars of one period often turn out to be the dogs of the next period.

I think it’s better to go with low-fee funds, which usually simply invest in all the shares in a share market index. Because of this middle-of-the-road strategy, they almost never feature among the top performers. But they also don’t feature at the bottom.

To find low-fee funds, use the Smart Investor tool. Click on KiwiSaver or non-KiwiSaver funds and then choose the risk level you want. If you sort the funds by “Fees (lowest first)”, you can then choose from amongst the first few low-fee funds. +Read more

Q: From Peter Lewis, vice president of New Zealand Property Investors Federation:

Owning residential property in retirement remains a smart and resilient strategy, especially in the face of inflation and uncertain financial markets, and the reality that retirement can now last for more than 30 years.

Unlike term deposits, which offer fixed returns that lose value over time, rental property provides both income and capital growth. Property values in places like Auckland have consistently outpaced inflation, and rental income typically increases over the years, especially as housing demand will, in time, continue to rise.

While term deposits gradually deplete, property preserves capital. Selling may seem practical, but once the money is spent, it’s gone. Retaining the property provides a steady income stream while keeping your financial base intact, a crucial advantage for those concerned about longevity or wanting to leave an inheritance.

Property also offers flexibility. Retirees can sell when the market is favourable, downsize, or tap into equity if needed. In contrast, fixed-term investments lock up funds and offer little adaptability.

Importantly, owning property gives retirees control. It’s a tangible, familiar asset not subject to the same volatility or institutional risks as many financial products.

A: You’re referring to last week’s Q&A, in which I said rental property isn’t a great investment during retirement, “unless you are wealthy and enjoy being a landlord, or regard the property as your children’s inheritance”.

That’s because you tie up money in the property you could otherwise spend gradually through retirement.

While last week’s correspondent said income from their rental was less than they would receive from a term deposit, I didn’t mean to imply that proceeds from selling a rental should go into term deposits – as you seem to think.

I’ve said in this column, many times, that it’s wise to put retirement savings you expect to spend in the next three years in bank deposits or a cash fund. But invest three-to-10-year money in a bond fund or medium-risk fund, and longer-term money in a higher-risk share fund – in or out of KiwiSaver.

I agree that term deposits may not beat inflation, but over the years a share fund will, in much the same way as property.

And while shares certainly have their ups and downs, property values have also wobbled.

True, shares tend to wobble even more. But that’s why I recommend putting only longer-term money in share funds, so there’s always time to recover before you spend it.

On your comment that “rental income typically increases over the years, especially as housing demand will in time continue to rise”, I’m not so sure.

A recent article on the Auckland Property Investors Association website says, “In April 2025, annual rental inflation fell by 0.7% nationwide, with Auckland (-2.4%) and Wellington (-3.1%) leading the drop… The gear is shifting and investors need to pay attention.”

Other reasons selling a rental before retirement and investing in bank deposits, a medium-risk fund and a share fund – as outlined above – is a good idea:

And if you’re concerned about inheritances, you can still leave plenty – perhaps half or a third of the proceeds from selling the rental.

Still, there’s a psychological element. Some people just seem to prefer to own “bricks and mortar”. Perhaps they enjoy DIY maintenance, or like the idea of providing good long-term housing for a family. If that’s you, go for it. I hope it works well. +Read more