The lump sum required for a couple to enjoy a comfortable retirement living in a major city has risen by $24,000 in just two years to $809,000, according to research undertaken by Massey University.
But the expert behind the research says those saving for the long-term should look through the recent spike in living costs.
The annual retirement expenditure guidelines are based on how much retirees are currently spending in retirement to give future retirees a steer on how much they will need to have for either a "no frills" or "choices" retirement depending on if they live in a major city or in the provinces.
The research shows weekly spending for a two-person household living in a metro area and having choices has gone up from $1423 a week to $1470 in the last year and for a single person household from $993 to $1029 a week for a choices lifestyle in a metro area.
In 2019 the research estimated a two-person household in a metro area would need $785,000 for a choices retirement but that is now $809,000.
Claire Matthews, research author and associate professor at Massey's business school, said keeping up with inflation was challenging when it came to retirement saving.
But she said those looking long term should still use a rate at which long-term inflation was expected to be.
"What you have got to say is yes the current inflation rate is high but it is a short-term spike and kind of ignore it and say in the long term actually it is going to be 1.5 to 2 per cent. Use that assumption and build it on that basis."
The consumer price index or inflation rate hit 4.9 per cent in the year to September 30 - the biggest jump in 10 years.
Matthews said if it got to a point where it became clear that inflation was going to plateau at a higher rate then it would require savers to build that in.
"But I think making an adjustment for 5 [per cent] is not the way to go."
However, she said it was good to review the lump-sum goal over time and not just set and forget it.
"As part of your retirement planning it is important to be looking at your target on a regular basis. I wouldn't say you do it annually."
She said in the early stages of saving for retirement, looking at it every five years and resetting it would be enough.
"You don't want to adjust it every year. But you need to be thinking about what you are doing."
She recommended reviewing it every five years until around age 55 and then every two years before going to an annual basis as a person got closer to retirement to keep on track with it.
Matthews said those closer to retirement could adjust their spending if they did not meet the estimated lump sum required.
"If you ended up in retirement with $24k less than what the guidelines suggest then you would just adjust your spending. You are not going to go back to the no-frills but you are not going to be at the same level of choices.
"You don't just have these discreet levels of spending - it is a whole spectrum and there is every value in between - you just adjust your spending."
She said $24,000 over a retirement of 25 years would only require a small spending adjustment.
The lump-sum estimates are based on a person having a mortgage-free home and also take into account that the retirees are getting New Zealand Superannuation.
For a couple in the provinces wanting a choices lifestyle, the lump sum would be $511,000.
An individual living in a city would need a lump of $600,000 to have choices while someone living in the provinces would need more - $688,000.
Even those living a no frills existence would need to have some savings above what they get from New Zealand Superannuation.
For a couple it ranges from just $75,000 for those living in provincial areas to $195,000 to those in a metro area.
While individuals can get by on a lump sum of $170,000 in the provinces and $293,000 for those living in a city.
Matthews said young people should use the information to understand the value of saving a little over a longer period of time.
"If they start now it is going to make life a lot simpler because they are not going to have to save large amounts later in life. The earlier you save the less you need to save on a weekly basis.
"I would hope what young people would take out of it is the advantage of starting early and the other thing they probably need to take out is one of key advantages that the current retired households have is that their expenses associated with housing are relatively low because most of them still own their own home - yes there are costs associated with that but it is a lot less than being in a rental."
She said the other key message for young people was the advantage to owning your own home.
"Starting off with KiwiSaver early when you start work, using it to get into the housing market and get your first home so that you get on the first rung, there are definite advantages."
For those closer to retirement, Matthews said it was important to remember it was never too late to save.
"It may be a reminder - that maybe you are not going to have absolutely the retirement you want to but it is not too late to get at least some way towards that.
"I would be encouraging people in that age group to be talking to a financial adviser and sorting out what is they want to do, what are their plans and what do they need to do to achieve those plans."