Superannuation won't even cover the basic cost of living for most retirees, Massey University researchers are warning - and you'll be caught out if you have money sitting in the bank, too.

The Westpac Massey Fin-Ed Centre has updated its Retirement Expenditure Guidelines.

They are produced annually and calculate what people currently spend to maintain either a "no frills" retirement or a "choices" existence with a few luxuries.

The costs are calculated for households of one and two people, in metropolitan and provincial areas.

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The guidelines show that all the household types included in the report spend more than they get from the pension.

A two-person household with a no-frills life in provincial New Zealand had to top up the least, at $7.36 a week.

A two-person household in a big city with a choices lifestyle would have to add in an extra $800 a week.

That meant a two-person household living in the city would need to have saved $787,000 to fund a "choices" lifestyle, while a couple living in the provinces would need to have saved $493,000. That assumes that the money is used up through retirement.

The lump sums required for a "choices" lifestyle for a one-person household were $764,000 and $411,000 for metropolitan and provincial areas respectively.

ESTHER TAUNTON/STUFF Lower food costs may have helped reduce the cost of living for some retirees.

Even a metropolitan two-person household with a "no frills" lifestyle would still require savings of $261,000 at retirement to supplement their superannuation.

That assumed that the money was kept in a balanced managed fund. Researcher Claire Matthews said, if the money was in a bank account, more would be required while interest rates remained low.

Matthews said the guidelines showed inflation was not being felt evenly.

The consumer price index was up 1.7 per cent over the year but the cost of living for the retired households increased by less.

A one-person household with a "choices" lifestyle in a provincial area had their costs drop 0.45 per cent year-on-year and a two-person provincial no-frills household had its costs lift 1.57 per cent.

The report said the drop for the single-person household was probably because of reduced food spending.

Matthews said it was important for people to consider their retirement options.

"While the lump sum required to fund the difference in spending over New Zealand Superannuation can seem daunting, it can be reduced by continuing to work either full or part-time, or by delaying retirement for a couple of years," she said.

"If you delayed your retirement for two years, continued working and saved all your NZ Superannuation payments, it would make a significant impact to your retirement nest egg."

Matthews said it should be easier for people to contribute more to KiwiSaver.

She had made a submission to the retirement income policy review being completed by the Commission for Financial Capability, arguing there should be more contribution options.

There should be a minimum 3 per cent contribution rate and then the opportunity to increase in 50 basis point increments over time, she said. That would allow people to gradually increase what they saved as their pay lifted.

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