David Hargreaves ponders the unanswerable question of how much money is desirable for a comfortable retirement

David Hargreaves ponders the unanswerable question of how much money is desirable for a comfortable retirement

By David Hargreaves

I've been intrigued by something of a heated debate that's been running in the old mainstream media over the holidays.

The debate, which could be loosely termed as being about 'how much is enough?' appears to have stemmed from an honestly expressed opinion by financial commentator Janine Starks that $2 million is the sum needed for a comfortable retirement.

I say good on anybody who is brave enough to proffer a view on this vexed subject and would stress at the get-go that I will not be expressing any view on an ideal number in this column. That's because I simply don't have a view on 'how much is enough'.

But I do have a few general views on the subject...

First up, I wonder how many people out there actually ever feel they've got 'enough' money? 

Maybe people are just coy on this subject, but most people I ever talk to who are in my estimation 'loaded' never seem to feel they are.

Too much 'shoulding'

Another general observation I have is that the whole subject of saving for retirement starts to become a bit arbitrary. You should save this, you should save that. Do this. Do that. Should. Should. Should.

It's a bit like having a discussion with a doctor over what you 'should' do regarding health. I'm reminded of the old joke about the middle-aged person who goes to see his doctor and says he would like to live to be 100. "Well," says the doctor. "Give up rich foods, give up alcohol and give up sex." "Ah, okay. And this will make me live to 100 doctor?" "Not necessarily. But it will certainly feel like it."

The trouble is, the whole saving for retirement issue is nothing like as simple as perhaps the financial planning and wealth management industries might seem to portray it. Life is simply not predictable.

At risk of seeming rather morbid, one thing that doesn't seem to feature much in the thinking is the fact while the average life expectancy in New Zealand is apparently currently about 82, not everybody gets there.

I'm sure we all have friends and family, unfortunately, who have been very well organised and disciplined and have excellently prepared for their retirement years - only to not see the other side of 60.

That's sad. And it's even more sad if people spend all their time thinking about some point in the future and kind of forget to live in the now. 

What about some fun?

I can't recall the specific details so don't have a link to share with you on this one, but I do remember a few years back being somewhat appalled by news coverage of a big windfall - presumably a big Lotto prize being won. The upshot was that various financial planners were approached for comment about what to do with such a windfall and they all went into the spiel about you must save this and you must save that. There was no mention anywhere of, "oh, and you might want to have a bit of fun with some of the money too". Too arbitrary. 

Money is not a means to an end. The key thing about money is the freedom and choices it gives you. Which is, yes, why you don't want to be short in your latter years. But there needs to be a balance found between living an enjoyable life now and not having a miserable time later. You need to hedge your bets between the known thing that is life right now and the unknown and the uncertainty that the future holds.

One of the things I always struggle with is that in talk about 'how much you need' there often appears to me to be some ambiguity in what your approach might be to your savings/nest egg in retirement. The key question I think is this: Do you intend to 'spend' your money in retirement, or do you regard your nest egg as an untouchable thing that will provide the income for you to live off, while you will never actually spend a penny of your principal?. 

Clearly, if you were talking about a nest egg worth as much as $2 million there would be a hell of a difference between budgeting on spending that $2 million during the course of your life and not spending a penny of it and still having $2 million in your bank account when you die. My suspicion is that much financial advice tends towards the latter course of action. And maybe for those with offspring and a desire to pass down wealth that is a huge priority, so fair enough I guess. For me as a divorced person with no offspring this is something I don't have a handle on since I only need to be concerned about providing for myself.

Making it last till you are 105

And of course people would be quick to say, don't spend your money because you don't know how long you will live. True enough. But let's talk about that $2 million. If we assumed that we lived to 105 (and most won't let's face it) even if we weren't to get any interest at all on that money, and not receive any super payments, we could spend $960 a week for 40 years before running out of money. But obviously, if we regard that $2 million as untouchable, as never to be spent, then the equation is very different and how we need to budget is very different.

I guess the real issue is that this is absolutely not a one-size-fits-all thing and shouldn't be treated as if it is.  

My great concern is that by being too arbitrary and by saying, oh, you have to save this much, we run the risk of alienating fairly large numbers of people. Some people may well simply say, "well, I can't save that" and end up not trying. And then we have got problems. And, as much as is possible, we need everybody to take personal responsibility for their future financial welfare.

The real answer to the 'how much is enough?' question is 'however much you have'. That's going to have to be enough. And that won't be the same for everybody. Not at all. But the trick is to get people to put as much aside as they possibly can - within the bounds of that juggling act between now and the future that I discussed further up.

What we do need is an environment in which people have a much greater sense of financial literacy than I see around me at the moment, as I have opined on previously

Sign it in blood

It would also help a lot if it were ever possible to get all the political parties together and agree (signed in blood!) what future superannuation payments and requirements should look like, including the crucial issue of the age at which super might kick in. It would also be good to see some firming up of rules and regulations and entitlements for people choosing to work on beyond retirement age and possibly offer incentives for those who do choose to work on such as maybe tax breaks or increased super payments according to how much later they retire. 

As for how much we need to save for older age. Well, as I've said before, probably the word 'save' itself is a bad one since it implies something very passive - the dropping of a bit of loose change into a bucket. We need an environment that encourages everyone, on whatever scale they can afford, to be 'investors' and to take a keen interest in improving their situations. 

We all need to know how to handle money and how to make it work for us and to take an active role in making our nest eggs as big as possible.

The other thing is, we need to reaffirm as a nation that it's never 'too late'. I think that's a bit of a classic human cop-out. We get to a certain age and then say, "oh, it's too late now", as a way of basically ducking out of making tough decisions. Generally it's only really too late to do something once you are dead. Up till then there's always a chance to improve your lot.

So, how much is enough? If everybody in the country was able to genuinely say in answer to that: "Well, I've got as much as I could realistically muster," then we wouldn't be doing too bad as a country. I suspect we are a long way from that situation at the moment.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

68 Comments

Comment Filter

Highlight new comments in the last hr(s).

You may be able to get Mr Bridges and Ms Ardern to jointly sign a document in blood. However it would be acceptable to get them to contract to declining their MPs pension if certain targets are not met.
So take a reason target: 15 years of super on average therefore currently start at 67 but adjust as life expectancy varies. So if a govt cannot deliver say 10 years super on average all MPs pensions to be cut drastically. It would help them focus their minds.

Okay so my question is "How many people have $2M in the bank" when they retire ? " Are you saying you need a Mortgage free home and $2M in the bank because I can tell you straight up that this is a VERY small percentage of the population in this boat as they retire, I mean its a life raft size boat not a luxury liner.Also as I have stated before, depending on the type of person you are you can get away with way less because $2M in the bank would be earning more money in interest than I have ever done working for starters and thats while paying off a mortgage..

"How many people have $2M in the bank" when they retire ? " Are you saying you need a Mortgage free home and $2M in the bank because I can tell you straight up that this is a VERY small percentage of the population in this boat as they retire"

This is the reason that many people are willing to buy residential property as an investment for retirement - they believe that property prices will continue to grow. Some are willing to be negatively geared in order to benefit from the capital gain in property in the long term. Long term history has shown residential property prices to have doubled every 10 years in Auckland - recent property price rises have continued to fuel that belief - this lead to FOMO. When you add leverage that becomes a sufficiently attractive return for some.

Nice article. Good to see a more realistic take on it for a change.

Personally I think it will be a work until you die type of future for the majority regardless of how much they save. The future is only going to get more expensive.

I'm a little addicted to this topic recently, but I recognize all the different clashing opinions on it all have their valid points.

I like the thought now, that there is a magic number out there that gets us to retirement. (FYI Gripe #1 - retirement is not just me, its my partner as well, how much will we both work over the next 30 years to get to that number? i want to figure it out).
That number needs a complex spreadsheet to calculate, and relies on big safety margins since inflation is a thing, insurance costs inflate too, investments come with risk. But its not impossible.
The number says something like - If we can live on 70% of our income currently, e.g. X-thousand-a-month, and save 30% of our income, invested, then in some number of years the saved income will generate enough returns to pay us our X-thousand-a-month we are used to living on.
The magic is that if you immediately believe you cant save 30% of your household income, then ok you need more years to build that buffer. If you can only save 5% then sorry to say but it will take 50+ years to get there. (Maybe you need to put more reliance on NZ super in your calculation)

But if you find a way to up that savings rate now, and maintain it, your years-to-security gets better and better.

If you can get your savings rate even higher than 30%, the question becomes not so much 'will I have enough to retire?' and more 'how early can I retire?'

Making sure your savings rate is high and guarding against the temptation to spend any extra money that comes your way (bigger house, bigger boat, fancier wine/food, new subscriptions etc) is the key. If you can do that the rest is easy.

Savings rate and average investment return are the only two numbers that determine time to retirement if you wnat to live on the same amount pre- and post-retirement. Income cancels out of the equation so someone earning $40k and living on $20k can retire the same time as someone earning $400k and spending $200k.
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-beh...

Corollary: If you want to retire earlier, raise your saving rate

I have done many detailed calculations on it, and always seem to draw the same simplistic conclusion.

You need to save 50% of your take home salary. To do that means you need to spend less than 50% of your take home salary. Based on this - every year you work, gives you one year of retirement.

I could write pages on the assumptions and calculations.
But put simply, it is an Inverse relationship. If you spend 80% now, then you only have 20% for the future. Psychological reasoning, is that if you can't live on 1/2 now. What makes you think you can live on 1/2 in the future?

Is this possible? for most people including myself, No.

What makes you think you can live on 1/2 in the future?

Superannuation?

If its around when you retire - then yes maybe you can.

For those <40 though, what is the likelihood it will be there at 65, if at all?

I don't factor super into my equations at all. Seems best not to, given we all know there must be radical changes to it in the future.
I personally think a means test should be brought in.

You have been living on half while saving (hence the 50% saving rate) so you can keep on living at this level in retirement (without saving from that point)

"every year you work, gives you one year of retirement"

It's better than this as every year you save 50% grows through investment until you need the money. So at 50% savings rate, you can retire after about 17 years and continue to live on the same amount.

Was there not a recent survey that proved enough is never enough ? they asked people with up to $10M and I think that was pounds and it didn't matter, the upshot was everyone wanted TWICE whatever they had ! I personally know someone who could retire tomorrow by selling their house, putting the money in the bank and living in their second house, but alias they probably think they cannot retire but complain about having to work !

Spot on! "Enough' will probably last you 10 years" that's the general thought behind that survey if it's the one I'm thinking of. So the question becomes, not 'How much is enough?" but 'How old should I be when I retire, and what can I do?"
I know it's implied in this article that 65 'is it', but it doesn't actually say.
Do we all want to hike up Machu Picchu when we're 70, or do it at 40? And if we choose 40, what is the trade-off by doing that?
The question of "How much..." is as much about time as it is about money ( that old expression!)

According to some research, the top 10% of NZers have only $1.4 mio in savings and that's including the house. I guess that's a little conservative but who knows. Can see massive opportunity for some kind of reverse mortgage system for people to realize $2 mio for their retiremment.

The same research shows the top 1% have about $4.3 mio.

https://www.stuff.co.nz/business/91890966/most-people-have-few-assets-an...

"People in the middle - most people, in other words - had a net worth calculated as about $95,000."
That's what happens when you run an economy based on Private Debt.

Half a million earning 10% plus both of us on national super gives us a very comfortable income without delving into capital. Make sure you are debt free with freehold property though.

How do you get 10% (50k)?

Good question Zachary. I don’t believe it.

Its made worse by interest rates being so low that its not worth saving " cash " as the return during retirement is a joke

which is why the correct answer is Zero
When debt collapses (which real returns are telling us is not far away) thats what you will have to count on
Retirement will soon be history

The basics are simple: spend less than you earn and you will create wealth, spend more than you earn and you will create poverty. Just how much wealth you need is debatable. Using 4% withdrawal rule, you can retire on $1m, if you own your own home and spend less than 40K per year. It can be done with a comfortable lifestyle...but most people in that position are to scared to try..and come out with lame excuses such as 'but I love my job, I wouldn't know what to do with myself'

Ha! there are endless things 'to do' if you put your mind to it, we are creative beings after all.

It's unlikely that if you have $1mio in the bank; own your car(s) outright and the home as well, that you've been 'getting by' on $40k before you call it quits. So you're unlikely to take a cut in lifestyle after giving work away. Add to that all the extra daylight hours to have to do something, and $40k 'aint going to cut it. Sorry.

Bang on, I don't post much here, because I've found new work. Although edging towards the top 1% I found it too hard to budget when I had options to earn again. It's the small things that add up, particularly house maintenance/improvement. I want to travel, entertain, upgrade my elderly X5, improve my home and be generous to my offspring. I can't remotely do that on investment income alone.

Please, cut that edging out Ex Expat.

Edging is accurate. Glacial pace with after tax returns on TDs at 2.38%. The more important part is that I’m not going backwards now that I have a salary.

spend less than you earn and you will create wealth

Soo true Samppa !

11
up

I appreciate that this site is essentially about finances. However, it really concerns me that when we talk about retirement all that is mentioned is money. Even the "Retirement Commissioner" focuses on financial issues.
I have been retired for just on four years (having able to financially to choose to retire before 65), thought much about retirement and quality of life in retirement prior to doing so, and having had an opportunity to evaluate how my circle of friends are going in retirement it reinforces the conclusion that I came to some years ago.
The six most important factors in strict descending order are:
1. Your health and fitness. Unless you are healthy and fit you are not going to be able to do the many things you may want to. This includes obesity; sorry but I have some obese relations and as one gets older this considerably limits ones options - including international travel - no matter how much money you have.
2. A stable relationship and family connections. A know of a couple of very lonely people and no matter if they were to now win lotto tomorrow they would still be so, so considerably unhappy.
3. A close circle of strong friendships of positive people. Our weekly Friday night drinks, dinners out, tramping trips and sharing each others experiences and expertise is so, so rewarding.
4. True interests. These are things that you are and have been passionate about for some time. It is not about having to go and look for these. Many years ago I researched my grandfathers service in World War One; in the past three years I have had two trips to Europe following in his footsteps. I love the environment, have always been interested in exploring our National and Forest Parks and now do so regularly.
5. Previous Experiences. Don't neglect having experiences prior to retirement. Memories of a family growing up and memories of Saturday sport, international travel and other holidays and activities are so valuable in making one appreciate life post 65.
6. Money. This is the least important. Having a mortgage free house is important (and its a poor financial decision to have a five bedroom upmarket property), but looking at my mates, those who have little more than the pension income - but the five things above - are thoroughly enjoying retirement and are readily able to be involved in a range of activities.
One may scoff at this. However, I know that my father missed out on points 3 and 4 and they were things I was determined to include in my retirement.

So how much does one need in retirement? Well, you will cut your cloth to whatever you have but enjoying and having a good retirement is more about the first five.

A good reply. It may change a little as you get to 70 (my age) and then 75 and 80. Obviously look after your health but with hindsight that ought to have been in my forties. Be prepared for those good friends to unexpectedly die. I find I never regret visiting family - half of mine are in Europe so some savings or investment income is essential.

printer8 we could be good mates !

Very good commentary printer8. I'd emphasize a bit more your #6, as I've seen what can happen when retirees run short on money. It is not a pretty picture. That said, the most important aspects of life after the necessities are family and friends as you note. Unfortunately, money sometimes is necessary for the necessities of life.

Printer8,

I agree with much you say. I retired at 57 and moved from Scotland to Mt. Maunganui nearly 16 years ago.i have never looked back.Like you,I enjoy a range of activities,including voluntary work.

I live very comfortably,with much of my income coming from dividends.

Everyone should be saving for their own retirement - the ratio of grey haired beneficiaries to working tax payers is only getting worse and worse. Eventually something will have to give.

The ratio of diligent grey haired workers to never intending to work young beneficiaries is ever increasing.

Oh? I see bunch of post retirement age baby boomers - many bordering on senility - who can't use a computer properly and are working the exact same jobs those young beneficiaries should be working. The difference is the young people need the work, these people don't.

The amount of baby boomers I see as receptionists, or working at service stations is disgusting - and their attitude is always horrible, like they're too good to be working there.

No surprise considering our cost of living ranked 14th most expensive in the world.

https://www.telegraph.co.uk/travel/maps-and-graphics/mapped-the-cheapest...

Dear David
Excellent article
6 months ago my wife received a call that her dear friend was in hospital
My wife’s friend had played a round of golf that morning & eaten dinner when she felt uncomfortable like she had food poisoning so she thought. The next day she finally accepted her husbands wishes & he called an ambulance because she simply couldn’t move out of her easychair
She stayed 2 weeks in hospital & was discovered to have had a severe series of heart attacks Tests confirmed
she was diabetic.
My wife and I visited her in hospital
at the end of her 2 week stay and she looked fine and we were chatting to her
She & her husband had purchased a recreational vehicle a few months earlier & they were able to have 5 short trips away around cottage country area but planning further afield
She told us how she just needed a couple more mixing bowls for the RV and was keen to get on the road again.
We visited her in the hospital on a Thursday and received a call
from her husband the following Tuesday she had died in hospital
We still can’t believe she’s gone
We visited her husband this week and he is holding together well They were married most of their lives
We just do not know how much life we get to live

I'm in my early 50's. 10 years ago my net worth was negative, had a reasonable corporate job but lost house after divorce. Child support was crippling, both financially and mentally. No hope of even thinking about saving for retirement. Depression, mental breakdown and a hopeless future.
Move forward 10 years and things couldn't be more different. I moved away from Auckland, started a business and thanks to hard work, dedication and a lot of luck I now find myself in a very fortunate position. With a net worth heading towards eight figures I don't need to plan for retirement.
My focus over the last ten years was on doing the best I could to make the most of the opportunities in front of me. It was only last year that for the first time I calculated my net worth and was blown away. I guess it’s possible that things could take a turn for the worst and I could lose most of the wealth I have created but that’s not the motivation.
I have more than enough now, I could retire tomorrow and live a very comfortable life. But I won’t, and I don't think I ever will. It has never been about accumulating a certain amount. It is all about doing what you enjoy, what stimulates you, overcoming challenges and building something that matters.
I hope I can maintain my health and may slow down as I get older but the idea of retiring is horrific to me. How much is enough is not measured in dollars. If you are lucky the dollars will be a side effect of never having enough drive, enthusiasm, challenge and the satisfaction that comes with success.

Did your ex do as well? Probably not eh? Good on you mate.

She has done OK, but not to the same extent as I have. Funny thing is that she was always far more materialistic than I was, however was far too risk adverse to start a business of our own.

Awesome. What sort of business did you start?

Initially a manufacturing company, but sold out of that after a couple of years and went full time with a consulting business that had been a part time venture.

A popular topic alright. Disclaimer: I wouldn't recommend my journey to anyone.
We were broke (not bankrupt) at 50, (I) retired at 61 while my wonderful wife continues in the business we created 24 years ago. I too asked myself all the above questions & read many overseas articles on the subject to compare expectations, but in the end it came down to income. It's not amount how much $ I can save (although that is important) it's about how much can I (we) live on? The answer was/is simple. We need $100,000 to live on in retirement. That's live, not exist. That's what we need today & it's the same for tomorrow, for as far as we can see at this point. Sure, things will quieten down with age as our mobility wanes, but it has been the goal for the last 5 years & remains the goal today. How do I know this is correct? Because close friends of ours have sold their business, both at 65, & are worth more than 3 million $ today, but cannot create enough income from their two rentals & combined super, which is between $80-90K is my guess. Sure, they have family off shore, but this should have been factored in before they took the big fat carrot 18 months ago when they sold their business & its property separately. So, my point is, even at $3 mill creating enough income is still an issue for them today, as they've learned to their cost (shock) as they're now talking about freeing up capital in their primary residence to 'get it working.' And these are both hard working, bright, outgoing & educated people who did a lot of things right along the journey.
For what it's worth.
Sorry to be a grump.

It does sound like their primary residence has too much capital locked up in it. Freeing up some of that sounds like a good idea.

LJM - My pennies worth, indeed cashflow is the key, but spending some capital in our later years is a smart thing to do too. Over the next 30 odd years if I live to 90, I'm going to start cashing out of smaller investments and spend that money that I created. leave the kids with say 60% not a 100% of my wealth.

what on earth do you spend $100,000 a year on?

I'm glad that many feel money ranks pretty low, cause I've got SFA.
Not through lack of trying, just constantly picking the wrong time to do stuff or make changes. I'm in my fifties and am fit and healthy currently with a passion for mountain biking that I get to share with my kids and grandkids ( old ghost road this autumn).
The articles constantly reminding me how far I've fallen behind where I wanted to be are not helpful in the least, the black dog is never far away, so they're more depressing than inspiring.
I do have some questions about the likes of the $2m figure. One would be where the heck would this vast some of money come to from. Someone above mentioned acurrent average of $95,000 per person, as a country we simply could not earn enough to reach that figure. Secondly if everyone had that sort of money surely the inflationary effects of it's spending would kill of any advantages of everyone having it?

That's the whole point, people who do have the $95k you talk about have it because they saved it, not spent it.

I’m all for some balance but the people who are in favour of ‘fun’ now are also the ones who will want ‘fun’ later. It’s not like they turn 65 and lose the spendthrift gene. You have to be honest about your future spending and which assets actually generate a return. Because downsizing your house is a lot harder than it sounds. People also forget things like health, these days you need $50K I’m reserve just for operations because there is a lot of stuff the public sector won’t do. I’m not saying everyone needs $2M plus, but if you are spending $100K plus a year now, chances are you’ll be spending $100K plus in retirement.

Buying a rental that you are willing to downsize to later is one way of painlessly downsizing.

For many retired couples it’s a freehold house, $50,000 savings, and
$1232 per fortnight after tax on the couple super rate.

How much yes indeed. Overall I think less than most people think a freehold house $500k in the bank or less and a part time job ? I think it depends on how much you want the freedom/lifestyle !
For me I always planned to have more disposible income when I gave up work ( early ) because I then would have time to enjoy it. Due to planning and commitment ( less a divorce ) I have been fortunate to amass 5mil in net worth which gives me choice I always strived for. That comes with responsibility to protect and grow it while enjoying it. I was blessed to meet a wonderful partner in the same position that gives a foundation for a wonderful life. They say money is not everthing which is so true but it helps but most of all having people in one's life in the same position so time or money is not a constrain to do things is the best. Time and freedom no matter what one's wealth is, is the greatest asset we can have. I once saw a quote that - money is only a problem when you don't have enough , deciding on enough is the key - no use being the richest guy in the cemetry.

I labored over how much was enough prior to retirement.
Nobody seemed game to put a number on real costs of retirement so I canvassed others who had already retired. There was a consensus that for a couple that owned their own home and lived in suburbia with no major health issues or extraordinary outgoings you could get by on $34,000 a year. That was a no frills lifestyle in 2015.
Extra costs to consider were typically $2000 to run a car and $2000 to own a pet. Many retirees also double as child minders with associated costs. The need to save to replace the car or visit remote family are also factors for many so need to be added to the $34,000.
Just taking the base $34,000 at an assumed rate of inflation of 3% pa then the base $34,000 becomes $38,267 after 5 years, $44,362 after 10 years, $51,476 after 15 years and close to $60,000 after 20 years.
Adding up all those years comes to just under $900,000 for a 20 retirement.
If a retired couple are eligible for superannuation then this number drops to roughly a $7,000 top-up each year so could be as little as $140,0000.
Any interest earned on savings can further reduce this.
I have put these numbers in this column because there are wildly varying numbers bandied around about the cost of retirement so I hope this helps anyone just starting the planning.

Post tax $400 for a single or $308 if married. So divorce before you qualify.

Great comment Framan, deserves more upvotes as it is very realistic.

IMO this article is damn near criminal.

Espousing the spendthrift lifestyle results in a lotta fun in the near-term, but not so much later. One should plan assuming that one lives at least to the median life expectancy. Unfortunately, it seems that people that do not do this, and live beyond their 60's become heartfelt articles for giving due to their "unfortunate" circumstances.

One should plan for a reasonable lifespan, while also enjoying life along the way, assuming a non-profligate lifestyle. Ignoring the possibility of living into the '90s, well, maybe one should also plan on living on catfood if you were so unfortunate to live that long...

For a website that is supposed to be financially literate, this is an illiterate article.

I'm rather ticked about this screed in that my genetics strongly suggest that I will be lucky to live into my 70s, and am currently almost 60. Our plans assume no super/pension/"social security", which resulted in a required nest egg of around double of what mr Hargreaves suggests is necessary (one should include inflation as well as taxation when doing financial planning which strongly increases his WAG value). The higher amount should be about right, although it may be a bit risky if inflation goes wild, or other factors change dramatically. A good monte carlo simulation using the prior 100 years data will hopefully reduce risk, although it will not capture exogenous effects. AT minimum it will be FAR better than assuming "average" numbers.

Agree it’s pretty irresponsible. It’s why the younger generation are ticked at baby boomers - they have a pronounced sense of entitlement. They won’t save what they need to and expect the govt to bail them out

This "baby boomer" is ticked off at the younger generation for precisely that aspect, lack of saving for the future.

Then again, I was rather annoyed at my compatriots at the time for not saving... maybe lack of saving is not such a generational thing. Around 30 years ago I got annoyed at my co-workers for buying new cars. I'd done my sums and found that buying a new car (nothing stupid fancy, just a "generic" new car that was maybe 60% of annual income prior to tax) set me back considerably in regards to my "retirement" timeline. A new car would push back the required retirement date by at least one year. Is that new car worth working another full year? Maybe for some, but not for me.

Millennials save more than any other generation. Find a different website for uninformed reckons. https://www.businesswire.com/news/home/20180110005313/en/Discover-Study-...

MYTH; The baby boomers saved... Why then the need for the debt buildup over the last 30 years?
MYTH; The baby boomers pass on wealth ... when the boomers have actually spent the wealth (thats why resources are depleted and massively deteriorated)
MYTH; The boomers invested wisely ... when its all on the back of a money printing LEVERAGE bonanza

Its this Debt Leverage that has given boomers their lifestyle while 'simultaneously leveraging the hell out of the environment. Sustainable it aint.

So saving for the future? Pffft.

The boomers already spent the easy resources CONSUMING & Building their Sandcastles ....

The key points in my experience are
1 work out what you spend (well before you retire)
2 then decides how much you intend to spend after you retire (income is lrrelevant- we saved 75% of after tax income for five years and still live pretty well before and after retirement. Cut out all the tapeworms like Sky , multiple coffees and excess insurance. $65k p a gives a fantastic lifestyle if you don’t fritter money away.
3 make 1 equal 2 and save and invest the rest
4 invest in ETFs or yield shares mostly. Make sure management fees are well below 70 points. Apart from this hold at least 10 x point 2 (I work in 15x) in laddered tds so you live on interest and don’t draw down core growth investments in market downturns.
Your share / etf investments are primarily for growth for the long haul - say when you are 75 plus and want to fly up front. The issue is how long you live while fit enough to stillnget out and do things. I know people in their late 80s still travelling the world although not many are that lucky.
All this assumes you paid off your house before you are 50. and don’t get sucked into Bach’s and boats - they’re worse than cocaine. Works fantastically well but don’t set the saving portfolio target too low and make sure you are investing for growth or inflation and low yield will erode your spending power up in the first 15 years of retirement.

I know one couple over 88 still flying the world, one of whom had major heart surgery in their 50s, so ignore early death as your get of jail card. If you keep fit and don’t smoke 92 is now the average.

The conversation thus far, points out the problem.

Money is merely a proxy. It's an expectation that it can be swapped for something real.

What we have, is a draw-down society where everyone has hidden behind 'money', to believe the draw-down could continue. What guarantee is there that the future will deliver? Nobody - but nobody - is monitoring that.

I recon growing our own food will be the highest priority, in the lifetime of most who read this.

Another take on this is 1) a lot of young people are not banking on super payments to support them, 2) a lot of young people use all their kiwisaver for a house and think the 3-4% matching will get them enough of a nest egg when they are 65. Both conflicting points, but as a 30 year old it is what i hear about.

The funny thing is i recognise this and will do the same. In 2 years i will drain my Kiwisaver for a house and start the retirement savings process from scratch at 32. No other way for us millennial's at the moment...

If you want to be able to afford to retire, invest in your health, family etc. and don't try to keep your wealth in currency accounts at banks in which your principal is at risk and constantly loses purchasing power. Trade money for something that won't depreciate - house, productive land, etc. Currencies always depreciate and many western economies may end up going the way of Venezuela. But don't be like the rich fool in Jesus' parable (Luke Ch.12).

One driver of the feeling of "never having enough" is less job security when you reach late fifties. You may need to fund an earlier retirement than you planned. I wonder if there are any statistics on how many people reach retirement age still with a good paying job. Is this most people?

According to the author,”money is not a means to an end”. How ridiculous,that’s precisely what money is. For me,the end was to retire early-57-and be able to do other things. That was over 16 years ago and I have been very lucky,it has worked out well. For others,money is a means to other ends.
To be honest,having read the article twice,I can’t see he bothered writing it