How much will you spend in retirement? What do you want to spend?

On Tuesday the Massey Financial Education Centre launched its latest retirement expenditure guidelines. I thoroughly recommend that you have a look. Presented expertly by Associate Professor Claire Matthews, who also heads the school, and Dr Pushpa Wood ONZM, the revised expenditure guidelines offer a solid, real-world, basis for thinking about how much money is required in retirement. Jane Wrightson, Retirement Commissioner, added context to the presenting team by refreshing us all on where we are at with New Zealand superannuation policy. Nick Hakes, Chief Executive Officer of Financial Advice New Zealand and host for the event, was a great advocate for professionalism in financial advice.

In attendance was a small crowd of financial advice, investment, and policy nerds. The group even included two past Ministers of Commerce and Consumer Affairs (Heather Roy, now Independent Chair of Financial Advice New Zealand, and Simon Power, now CEO of Fisher Funds). We met in a pleasant shared office space in downtown Auckland.

Three things really stood out from the presentation:

1.      Associate Professor Matthews highlighting that achieving the lump sum required to move from a ‘no frills’ budget in retirement to a ‘choices’ budget was less than many think, and therefore achievable. This practical optimism is often lost in the overly dramatic world of political debate, and is the natural ally of good quality financial planning.
2.      Dr Wood’s caution that you can live on New Zealand Superannuation provided that: you own a home, you have no debt, and you’re happy with a simple life that includes almost no travel. Pushpa then added very supportive comments about the value of professionalism, boosting her host’s mission.
3.      Jane Wrightson warned us against tinkering needlessly with New Zealand superannuation and encouraged our participation in the upcoming review of retirement income policies.

Pulling it all together, it felt like these are the lessons:

1.      To boost quality of life in retirement we need comprehensive and lasting cross-party efforts to make housing more available and more affordable.

2.      In the absence of good policy individuals can do much to steer their financial affairs better and advice helps a lot. It’s a big problem, but not insurmountable for the careful and well-advised.

3.      The Massey Fin Ed Centre academics offer consistently practical and useful contributions that help guide financial advisers and their customers towards saving for a comfortable retirement.

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