Why Many Retirees Underspend (and How to Enjoy Your Money)
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Many Kiwis spend decades building their savings, so drawing that money down can feel strange. Yet underspending in retirement is surprisingly common in New Zealand. Plenty of retirees reach their later years with a healthy balance and a list of experiences they never got around to. Here is why it happens and how you can enjoy your money with more confidence.
Why underspending in retirement happens
Fear of running out is the biggest reason. Nobody knows exactly how long they will live, and rising living costs, health expenses and possible rest home fees can feel like looming threats. After a lifetime of saving, spending also goes against habit. Some retirees want to leave an inheritance for children and grandchildren, which is a worthy goal but can quietly crowd out their own enjoyment. Others simply have no clear picture of what they can afford, so they default to caution.
Get clear on your numbers
A clear view of your income helps ease worry. NZ Super provides a regular payment, and many retirees add KiwiSaver withdrawals, term deposits or other investments. Write down your regular costs such as rates, power, insurance and groceries, then compare them with your income. Many people discover they have more flexibility than they expected. A licensed financial adviser, or a free tool like Sorted, can help you test different scenarios so your decisions rest on facts rather than feelings.
Plan for needs, a buffer and fun
One popular approach is to think of your money in three parts. The first covers essentials. The second is a safety buffer for surprises like car repairs or dental work. The third is a set yearly amount just for enjoyment. Giving yourself permission to spend that third portion can remove the guilt that holds many retirees back.
Simple ways to enjoy your money
Enjoying your savings does not need to be extravagant. You might take a road trip around the South Island, visit family overseas, or join a club or evening class. Making your home warmer and more comfortable is another smart choice, especially through a New Zealand winter. Your SuperGold Card can stretch your budget further on everything from transport to dining. Some retirees also like to gift money to family while they are alive so they can see the joy it brings.
Caution is sensible, but it should not steal your best years. Spending thoughtfully, with a plan you trust, lets you protect your future while still making the most of the present. If you feel stuck, a conversation with a trusted adviser or an organisation such as Age Concern can help you feel more at ease.
