Whether retirement is years away or just around the corner, how do you know what income you might need to achieve the retirement lifestyle you want?
Last year, our research showed that 77% of New Zealanders don’t know how much their KiwiSaver account could be worth when they retire, making it difficult for most of us to make plans for our retirement.
Thanks to innovations we delivered last year, members of the Kiwi Wealth KiwiSaver Scheme were given tools that helped them estimate what their KiwiSaver balance might be worth – and then review their investment direction and change funds, or review their contributions, if they wanted make changes to their KiwiSaver investment.
The challenge for many of us then becomes: How much money will we need when we retire? It’s useful to know how much money we might have invested in our KiwiSaver scheme, but what lifestyle might that money allow us to afford?
Members of the Kiwi Wealth KiwiSaver Scheme can now get help answering these questions. We’ve just released a new feature that allows members to put context around their retirement planning, helping them to both understand what they might have when they retire – and, now, what they might need in order to afford the lifestyle they desire.
Using research conducted by Massey University in 2015, we provide our members with three types of retirement “goals” – scenarios that allow people to select one of three retirement lifestyles they desire when they retire.
We provide an estimate of how much money you might need to achieve the retirement goal you selected (indicated in blue) as well as how much your KiwiSaver balance might provide. (And if you want, you can choose to include or exclude New Zealand Government Superannuation from the calculations.)
The graph lets you track the estimates from now until your anticipated age of retirement (typically 65 years old), and then how these funds will be “drawn down” during retirement.
We also provide an estimate of how much your KiwiSaver account might provide in terms of annual income – and what you might need in order to achieve the retirement lifestyle you selected.*
* Our calculator gives theoretical fund values. It includes various assumptions and cannot predict fund performance. No personalised financial advice is provided through this tool. If you require personalised financial advice (which takes into account your own financial situation or particular goals) we recommend you contact an authorised financial adviser
Mind the gap
If there’s a gap – or you’re told you’re “Off track” – then you can review your contributions and see if it makes sense to make changes. And, as before, you can review your investment direction – which takes into account your timeframes and appetite for investment risk – to see how that might make a difference.
The result? You can now make more informed decisions on how to take control of your retirement.
Retirement’s not the only goal…
While retirement’s important for most of us, it’s usually not the only financial goal we have – there are other reasons for having investments, and there are other types of investments we can use to reach those goals. Stay tuned for more updates over the next few months as we look to provide more ways to help Kiwis achieve their financial goals.
The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any investment decisions.