Retirement Calculator New Zealand

Updated 5 December 2020

How much income will you need in retirement?
Are you saving enough?
Will you run out of money in retirement?
Are you on track?

Compare what you may have to what you will need. Our retirement calculator considers KiwiSaver contributions, how much you earn right now, how much you plan to spend during retirement and how old you are. Simply slide the inputs below to match your situation, and click view report for a detailed calculation.

Read this first: Salary input and assumption of annual increases

• In the calculator below, your year's income is driven by "your annual income (pre-tax)" (input 3)  and the % you select for "Expected annual pay rise" (input 6, currently set to 2%).
• If you want to retire on a percentage of your current salary, please move this to 0%. Otherwise, the "Percentage of current income you want during retirement" will be calculated using the expected annual pay rise percentage.
• The 2% default increase is to counteract the effects of inflation. For example, retiring on 60% of a $50,000 earned in 2020 isn't relevant if the same person retires in 2065 on a salary of $150,000.

Definitions

Current age

• Your current age

Age you plan to retire

• Our calculator assumes that you will no longer make any retirement saving contributions to KiwiSaver after you reach the retirement age. So, if you retire at 65 years of age, your last retirement contribution will be made at age 64.
• While in practice you will contribute every payday with KiwiSaver, our calculator assumes that you contribute once, annually, at the end of each year.
• The difference is minimal, and our calculator is more conservative as a result as it does not include any compounding gains made within one year.

Your annual income (pre-tax)

• Your total income, pre-tax, paid by your employer or your business. Do not include income from other sources, such as investment properties, shares or managed funds. 

Total KiwiSaver contribution (including your employer’s)

• Your employer contributes 3% to your KiwiSaver. You either contribute, 3%, 4% or 8% of your before-tax pay.
• For example, if you contribute 3%, the total KiwiSaver contribution is 6% (3% from your employer and 3% from you). 

Current KiwiSaver balance

• This is your current KiwiSaver balance as it appears today, or as recent as you know. 

Expected annual pay rise

• This is the percentage you expect your income to increase every year.
• As a baseline, throughout New Zealand, most salaries and wages go up between 2% and 4% per year.
• In 2018, Stats NZ reported hourly earnings increased 2.9 percent for wage and salary workers.

Salary input and assumption of annual increases

• In the calculator below, your year's income is driven by "your annual income (pre-tax)" (input 3)  and the % you select for "Expected annual pay rise" (input 6, currently set to 2%).
• If you want to retire on a percentage of your current salary, please move this to 0%. Otherwise, the "Percentage of current income you want during retirement" will be calculated using the expected annual pay rise percentage.
• The 2% default increase is to counteract the effects of inflation. For example, retiring on 60% of a $50,000 earned in 2020 isn't relevant if the same person retires in 2065 on a salary of $150,000.

Percentage of current income you want during retirement

• This is the percentage of your pre-retirement household income you think you will need in retirement.
• For example, if you currently earn $60,000 per year and would like a retirement income of $30,000 (excluding government superannuation payments), then the percentage is 50%. If you earn $100,000 and want a retirement income of $75,000, then the percentage is 75%.
• This amount is based on your income earned during the year immediately before your retirement, and it will increase every year to your expected retirement age if you have inserted a percentage into the expected annual pay rise (above). 

Expected years of retirement income

• This is the total number of years you expect to use your retirement income.
• For example, if you plan to retire at 65 and live until you are 90, that is 25 years.

Investment returns, inflation and New Zealand government superannuation payments:

Expected rate of return before retirement 

• This is the annual rate of return you expect from your KiwiSaver performance, after tax and after fees. For example, the 10-year, pre-tax performance of leading KiwiSaver Conservative and Growth funds is around 5% and 7% respectively, as of December 2018.
• The actual rate of return on investments can vary widely over time, and there is a risk of your total investment losing value in a global financial crash. 

Expected rate of return during retirement

• This is the expected annual after-tax rate of return you expect from your KiwiSaver fund during retirement. This is likely to be a lower return than your expected rate of return before retirement because most New Zealanders switch to a conservative or cash fund option.
• The actual rate of return is largely dependent on the types of investments you select. Most KiwiSaver cash funds have paid an average of between 2.50% to 3.00% after-tax in the 10 years to December 2018. Term deposits, i.e. leaving money in a bank account, currently pay around 2.00% to 4.00% depending on the length of the term, whereas on-call bank accounts pay between 0.00% to 0.25%.
• All of the information above is historical or hypothetical and no guarantee of future returns. The actual rate of return on investments can vary widely over time, and there is a risk of your total investment losing value in a global financial crash.

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Expected rate of inflation

• This is what you expect the average rate of inflation to be in the long-term. In New Zealand, Stats NZ publishes the Consumer Price Index (CPI). Using a calculator from the Reserve Bank, between 1990 and 2018 the CPI had a long-term compounded average of 2.1% annually. In 2008 and 2011, the Reserve Bank’s data shows that inflation was around 5% per year.
• For 2018, the CPI was 1.9% annually as reported by Stats NZ.

NZ Superannuation payment

• We have included the after-tax 2018/2019 NZ Superannuation rates for married, civil union or de facto couple where both partners qualify (tax code is M).