A couple who want to live in a major New Zealand city and have a comfortable retirement would need about $486,000 based on the spending of today's retirees, research has found.

Westpac Massey University's Fin-Ed Centre has updated its retirement expenditure research which analyses the spending of over 65 year olds based on Statistics New Zealand household economic data.

It found that while the financial position of retirees had improved in 2016 because New Zealand Superannuation went up more than the cost of living, there was still a need to have additional savings above New Zealand Superannuation for a comfortable retirement.

The gap between what people spent and what they received in NZ Super was $503.26 on average a week for a couple living in Auckland, Wellington and Christchurch on a choices budget. To pay for that gap a couple would collectively need to have $486,023 in savings by age 65.


While the gap for those living in the provinces is lower at $419.01 a week that would still require a lump sum of $402,682 for those retiring at 65 and wanting to have some luxuries.

Couples who both qualify for New Zealand Superannuation got $591.94 a week in the hand in 2016 if they were taxed at the M rate.

Single-person households have it tougher as the spending gap is similar to a two-person household. The weekly gap was $372.69 for those in big cities and $400.84 for those in the provinces requiring a lump sum of $360,620 and $388,073 respectively for a choices lifestyle.

Massey University's Claire Matthews, who undertook the research, said the information was designed as a guide to help people develop a projected budget for living in retirement.

"Pre-retirees can use this information to plan budgets for their desired future retirement lifestyle and as a basis for working out the savings they'll need if that lifestyle is to be achieved."

Matthews said a choices budget would allow someone to buy steak or biscuits in their shopping trolley as well as a greater range of fruit and vegetables.

But a no frills budget would only cover the basics.

"It is not a bare bones retirement but it is basic."


Matthews said the research was aimed at getting people to think about what they could get for their money and whether they could live on that amount.

She said there were some expenses which naturally reduced in retirement like spending less on lunches and coffees, because a person was home more, and less on transport or work clothes.

The research also confirmed that some Kiwis are able to live off NZ Super alone if they live frugally.

Spending by retired couples living in the major cities on a no frills budget was less than NZ Super.

While the shortfall for couples in the provinces living a no frills lifestyle was an average of $87.56 per week. Paying for that shortfall would require a lump sum of about $78,000 by 65.

The research also highlights how much a person who is 50 now would have to save to get to either a no frills or choices retirement budget if they haven't already started.

A couple who want to live in the city and have choices would need to save $608 a week to get there by age 65.

"If you leave it to your 50s trying to save that kind of money is really daunting," Matthews said.

But she said the research was really aimed at younger people who had more time to save.

"If you do it now your ability to save these sums is quite realistic."

Matthews said KiwiSaver could be a great help.

"A person earning the median weekly wage of $937 in 2016 and making the minimum contributions of 3 per cent and receiving the employer contribution of 3 per cent could expect to save $58,974 if starting at age 50."

While someone who started at 40 would be able to save $117,500.

Simon Power, general manager consumer banking and wealth at Westpac, said while it sounded really basic the key message was the sooner you start to save the better.

"The fact is starting at 40 as opposed to 50 makes a substantial difference."

Power said those who were older should focus on saving what they could as early as possible.

The full research can be viewed here.