Planning for retirement can feel a bit confusing. You’re budgeting for something that is still years ahead of you. You don’t know how long it will last, or what kind of lifestyle your money could buy when you get there.
And even if you’re regularly paying into your KiwiSaver account, how can you know that it will be enough?
When enough is enough – how much will you need?
It doesn’t help that, when it comes to funding the lifestyle we want in retirement, we often don’t have a good sense of how much it is really going to cost. It comes down to two things:
- How long you’ll live
People are living longer than ever before. In 1900, people in Western countries tended on average to reach their 40s. Now the average is high 70s, pushing into the 80s, and is still rising.
If you retire at 65, this means you could be looking at 25 to 30 years spent in retirement. How much money are you going to need to last you for that length of time? And will it be enough to fund the lifestyle you want in your retirement?
- The kind of lifestyle you want
How do you picture your retirement? Do you see holidays abroad, nice meals in fancy restaurants, long hours at the beach or with the grandchildren? Most people, when imagining their golden years, picture them as 24 carat, solid gold – and why not? After a lifetime of working hard, why shouldn’t you live the good life?
The big question, though, is will you be able to afford to?
After all, the turbo-charged retirement lifestyle comes with a turbo-charged price tag attached.
So how can you know if you’ll have enough for retirement?
If it’s starting to feel like only a crystal ball can help you work out how much you might need for retirement, don’t worry. Because, we’ve got something even better – our online tool.
Our guide to your potential future
We’ve made our tool simple and easy-to-use. Users aged between 18 and 60 can 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 enhance 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.
The tool may give you an idea of how much your KiwiSaver account could potentially be worth when you retire, how long it might last you in retirement and the kind of lifestyle it might afford you.
Not on track for the retirement you want?
And if you don’t seem to be heading for the retirement you were hoping for, we’ve got some tips, info and ideas that could 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.