If there was ever any prospect that the pension was enough to sustain a comfortable retirement then Claire Matthews has buried that faint hope.

Matthews, of Massey University's Business School, has just issued the latest Retirement Expenditure Guidelines, an invaluable survey which provides an informed picture of the financial needs of older New Zealanders.

The series, running since 2012, is now starting to shed light on what the hundreds of thousands of Kiwis in Generation X will need to think about as retirement starts to figure on their not-so-distant horizons.

The inescapable bottom line — though it hardly needs repeating — is that they will need to save because the pension is no longer adequate to fund "no frills" retirement, let alone what Matthews' report calls a "choices" lifestyle.

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By "choices", the survey means there is enough in the kitty for holidays and movies, to run a credit card, to keep up with insurance payments and dine out. In other words, to tick the boxes that boomers and Gen Xers would satisfy most weeks.

The gap, driven especially by rising transport and health costs, is not exactly small change. For a two-person household of over 65 year-olds, the cost of no-frills city living was $872.22 a week at the end of June last year. That was $271.92 more than NZ Super paid to a couple.

The gap in the provinces was much closer, with couples having to find $21.18 a week.
Those on their own faced making up a difference of $200.24 a week for a no-frills lifestyle in the cities, or a shortfall of $170.84 in the provinces.

For many retired New Zealanders, the gap is bridged by wages earned from working beyond the age of 65, by KiwiSaver payments and from investment income. A big majority of this group owns a home — 74.5 per cent of those over 65, versus 44.4 per cent for those under 65, according to the last Census. That means their retirement income does not go on mortage payments or rents.

It is a different story for the mass of New Zealanders moving towards retirement. Many have student loans to pay off. A lot have large mortgages. Thousands have debts and, especially in Auckland, little prospect, at least for now, of owning a home.

Based on Matthews' calculations, the lump sum needed at retirement to cover the gap for single people at retirement in the city is $196,000 on the "no frills" lifestyle and $769,000 to have some choices. The figures are not that different for two-person households — $266,000 and $783,000, though they are a lot less in the provinces.

But by any New Zealand standard, these sums are sizeable. The weekly savings required to achieve them from the age of 50 — a realistic the point for many families once the costs of raising children is behind them — is only in reach of those on very good incomes. For example, a retired couple in the city wanting some "choices" as they grey would need to save $964 a week after they turn 50.

Matthews' work serves some valuable purposes. It is clear that the savings message needs reinforcing. It is imperative that affordable housing remains a policy priority if New Zealanders are to retire in comfort and dignity. Older New Zealanders - 65 and over - make up 15 per cent of the population. By 2028 this proportion is expected to be close to 20 per cent. If the pension remains universal, the cost of funding it in a decade will approach $20 billion a year.

The future of an ageing New Zealand needs a lot of close attention.