We humans are an irrational bunch, especially when it comes to money and this is especially true when it comes to saving for retirement. It goes against our instincts - it’s human nature to put our short-term wants before our long-term needs.
After all, if you’ve got a spare $50, it’s much more fun to spend that money now on a treat for yourself – the movies or a nice meal – rather than put it into your KiwiSaver account and wait decades before you might be able to use it.
Saving for retirement often comes down to making this kind of choice: using your money for stuff today, or putting it into your KiwiSaver account to benefit the future you.
For some people, this isn’t much of a choice – why deprive yourself now, they say, when you have no idea what your future will hold? What if you scrimp and save for retirement, only to meet an untimely end before you get there? That would suck.
…or saving for tomorrow?
On the other hand, what if you do live well past your 60s and 70s and don’t have enough saved? You’d spend your golden years worrying that you won’t have enough to make ends meet. That would also suck.
It’s a balancing act
It's about finding a balance – between future you and current you. Between the desire to prepare for the future and save, versus the impulse to live for the present and enjoy earnings now.
So how best can you approach this balancing act? Well, a good place to start is having a clear idea of how much you may need to save, to get the retirement lifestyle that you want.
A tool to help current you save for the future
And that’s where we can help. We’ve created an online tool to help you (if you are between 18 and 60 years old) understand how much you could potentially have in your KiwiSaver account when you retire, and whether this could be enough to afford the retirement lifestyle you want.
We’ve made our tool simple and easy-to-use. You start out by selecting one of three different retirement lifestyles:
- There’s the no frills lifestyle - designed around a basic budget.
- A flexible lifestyle that gives you more options than the basic one and allows for some luxuries.
- Or there’s the deluxe lifestyle, that allows for some luxuries, and foreign travel.
We break down the costs of each lifestyle for you, so you can see which one fits most closely with the retirement you’re aiming for, or the one that you think might be the most achievable.
You then fill in some details about yourself and your KiwiSaver account – such as your age, wage and when you hope to retire and your current KiwiSaver account balance and contribution rate.
Our tool then takes this info, and the performance of the equivalent Kiwi Wealth KiwiSaver Scheme investment fund, to work out what your KiwiSaver account balance could potentially be when you retire, and shows you how you might be tracking towards the retirement lifestyle you selected. See the ‘How are these estimates calculated?’ page of the tool for more detail.
We’ll continue to develop our tool based on feedback from its users – including you! If you’ve tried out the tool and have ideas on how we can improve it, we’d love to hear from you.
Not on track for the retirement lifestyle you want?
If you’re not currently heading for the retirement you were hoping for, we’ve got tips, info and ideas that might help you get back on track. Check out the Kiwi Wealth Education Centre to find out more.
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.