Real Estate Investing – Property Investor Program

Is the pension enough to retire on?

A lot gets written on this subject matter.  Often numerically.  However this article is not to boggle you with numbers, but instead, to look at the subject matter holistically. Sometimes, to think of something differently – you need to look at it with a different perspective.

So lets begin.

The day has finally arrived

Let’s take a moment and fast forward your life.  You’re 65.  And retirement has finally arrived.  You are inundated with best wishes for health and happiness.  But as you hang up your boots or shut down your computer one last time, you realise there is a pretty big problem.  You have no more work.  Your income has stopped.  But, your living expenses will still continue.  And not only will they continue, they will increase annually to keep up with inflation.

For most Kiwis, life until the age of 50 is what one could summarise as being ‘too busy or I’ll be all right’.  Then when we hit 50, the realisation that retirement is just around the corner kicks in.

At time of writing this article, the New Zealand super, or the pension is the main source of income for New Zealanders older than 65.  But unfortunately there are three issues with the pension.

The pension might change

Although you might think you’ll live off ‘the pension’ when you retire, there is no guarantee it will exist in the same way it does today when you turn 65.  The number of kiwis over the age of 65 are expected to double from approximately 650,000 now to an estimated 1,300,000 by 2040.

Between 2009 and 2017, government contributions to the the pension fund were suspended. In December 2017 contributions resumed. The pension fund is estimated to be approximately $35 billion, and will need increasing to over $150 billion for any chance of covering these additional estimated retiree costs by 2040.  Therefore it is highly likely that the pension will be altered in some way again – before the bulk of Gen X and Gen Y start to retire.

How old will you be in 2040?

Could you live off $411 a week?

The pension today is around $411/week for an individual or around $633/week for a couple, after tax.  That works out to approximately $21,500 for a single person, or $33,000 for a couple, annually.  Now again, imagine you have just retired today. Would you be able to sustain your current lifestyle on $33,000 annually, as a couple, for the rest of your life?

At $411 a week you are handcuffed. Take a moment and list out your expenses and see how much is left each week on your current lifestyle.  Then with just the absolute essentials? And remember that’s before inflation.

At 65 you should be partying. You’ve brought up children and worked super hard for 40 years.  But now at 65, you may end up in the worst position you could possibly be.  Especially if you’re only source of income is your job.  Which has just stopped.

You shouldn’t be handcuffed at 65.

The pension holds you back

The fact that the pension is there, stops most Kiwis from being ambitious. We believe, that the pension is our safety net.  There to catch us and look after us when we need it.

This causes many of us to adopt the ‘she’ll be right’ attitude and let time slip by. We think “we don’t need to worry about our retirement it’s all taken care of”.  And so for many, the ambition to build for our retirement goes out the window.

Imagine if in New Zealand there was no pension. Imagine if you knew that at the age of 65, your income would stop, and that’s it!  You would be saving, building, planning, creating and preparing for your retirement your whole life!  Building other sources of passive income in the prime of your life, there to serve you for the rest of your life.
But we don’t because we are told the pension will look after us.

The risk of kiwisaver

KiwiSaver came into operation on Monday, 2 July 2007.  The idea of KiwiSaver has its merits but it also has some issues (this is not a political view by any means).

With KiwiSaver you have someone else in charge of your money. Other people with nothing personally at stake, controlling your money.  It’s just not logical having other people control your KiwiSaver money.  Think about it, it’s the money you are counting on to be there when you retire.  And it’s in the hands of people without any skin in your game. KiwiSaver funds make their money in fees – irrespective of whether you win or lose.

If bad decisions are made, your KiwiSaver fund risks being wiped out, as demonstrated in this article published during the COVID-19 pandemic.

Is the pension enough to retire on?


You cannot simply rely solely on the pension or KiwiSaver for getting sorted for retirement.  As cliché as it sounds, you need to take control of your own destiny.  We talked about a different perspective and it’s this different perspective that is needed to get you going.

If you tell yourself, the pension and KiwiSaver funds will look after you then you are less likely to do anything about your retirement now.  But if you say to yourself, “well hang on maybe the pension and KiwiSaver are not such a safety net after all”, you will start to subconsciously build, plan and prepare for retirement on your terms.

From that point onwards, your perspective will have changed.

Outside of the Pension and KiwiSaver, property is an investment asset class accessible to all Kiwis.  Property investing can be for everyone.  It has low barriers to entry, delivers long term asset growth and can deliver passive income while you sleep. And if executed correctly can deliver tremendous results.

Take action now.  Start preparing now.  Arm yourself with the right knowledge, surround yourself with the right people and start building your own real safety net.