How much you may need to retire, and why many are falling short

Most New Zealanders are not on track to have saved anything like enough money to achieve the things they want to in their retirement, Westpac says.It has released research that shows 66 percent of people said they were planning for a retirement involving at least some travel and leisure activities. However, only 36 percent of people overall said they were confident they were on track with their retirement savings.Andrew Twidle, chief executive of BTNZ, which provides Westpac's KiwiSaver, said people would need about $1 million as a couple to allow for luxuries in retirement."If you want to have a slightly more exciting retirement in terms of being able to have some trips, possibly the occasional trip overseas, we're of the view that you need to have in excess of a million dollars saved up to do that, to last into your retirement."When we're look[ing] at the average savings level at the moment and then projecting that forward, very few people are on track for that."Depending on the fund that you are invested in at the moment, conservative or going through to a high growth fund, and based on the average age of 41... and the average balance around $43,000."And if you sort of looked, you know, at all the averages, average salary, average growth of salary over time, you know, contribution levels at current levels, that would give you a range of savings at 65 of between $310,000 and about $487,000."Massey University's 2025 retirement expenditure guidelines suggest couples aiming for a "choices" lifestyle in retirement need household savings of around $1m in metropolitan areas and around $450,000 in provincial New Zealand.He said people needed to understand they could be funding many years of retirement from 65, and it was just the start of another phase of life.Kernel founder Dean Anderson said rather than simply focusing on saving $1m, the critical thing was for people to work out what was important to them and what the minimum lifestyle was that they wanted in retirement."How much each year on travel, the home, family time... That then enables you to work out how much you realistically need to save to fund this on top of Super... it's not hard to dream of ways to spend money. All of us at times will sit there and think of European holidays, a fancy car, a boat, enjoying great food with family and friends. That's why Lotto is sadly so popular."He said if there was a gap between what was likely to be possible and retirees' goals, they would need to make tradeoffs."This could be downsizing, taking out a reverse mortgage, cutting back on some of the desires and so forth. The key point is it's about planning and getting closer to your money. The more we ignore it and delay these conversations, the worse we actually feel."He said people should take care about focusing on retirement goals at the expense of things they might be able to do now."Life is still for living. Don't sacrifice everything today in the hope for tomorrow. There is a balance to be enjoyed between enjoying things today, while still planning for an exciting future."The Westpac survey found a third of people thought they would need less than $500,000 while 21 percent expected to need $1m or more."Whether you're 20 or 60, taking the time to understand your retirement goals and review your KiwiSaver settings, then seeking advice if you need it, can make a meaningful difference to your future financial wellbeing," Twidle said.The survey findings indicated continuing with paid employment might be how some New Zealanders would fund their retirement - one in five people said they expected to keep working until they were 70 or older."Retirement might feel a long way off, but the earlier people take action, the more time their savings have to grow. Small steps today, such as increasing contributions when you receive a pay rise, checking your fund remains appropriate for your goals, or making voluntary contributions, can have a significant impact over time."Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make and spend money.