How Much KiwiSaver Do You Need for Retirement?

Retirement is one of those things that seems distant and unimportant while young. And then, by the time we get older and start to worry, it’s often too late. That’s where KiwiSaver comes in. KiwiSaver is designed to help Kiwis kickstart their retirement funds early, to maximise their returns and ensure they can afford to live comfortably throughout retirement. So how much KiwiSaver do you need for retirement? Canstar takes a look.

How much do you need for retirement?

Before looking at how much KiwiSaver you need, you need to know what type of retirement lifestyle you want to fund. And new research from Massey University breaks it down into two budgets:

• No Frills: a basic standard of living that includes few, if any, luxuries
• Choices: a more comfortable standard of living, including some luxuries and treats

Currently, to fund either of these lifestyles, either as a single or part of a couple, requires income of, roughly:

Weekly income

Annual income

What about government super?

Fortunately, you won’t have to cover all those costs yourself. In New Zealand, most people are entitled to superannuation once they hit 65. It’s an allowance that helps take off some of the financial pressure in your later years.

The current superannuation rates (after tax, if you have no other income) are:

• Individual: $555.15 per week or $28,867.80 per annum
• Couple (assuming both qualify): $854.08 per week or $44,412.16 per annum

As you can see, based on the above estimations, your superannuation alone won’t be enough to cover your retirement costs, no matter where you are living or how frugal you are. So, you are going to have to cough up some of your own money. The gaps between expected costs and superannuation can be seen below:

Annual shortfall

How much KiwiSaver do I need for retirement?

Below are estimations of how much KiwiSaver you’ll need to live, in addition to your government super. The results are based on the assumptions:

• You have no other source of income besides superannuation
• You have no other form of savings besides your KiwiSaver balance
• Your KiwiSaver balance, once you retire, continues to grow at the same rate as inflation

Singles**

*Life expectancy based on latest Stats NZ data. Life expectancy figures calculated accounting for retirement at 65. All figures are an estimation and should be used as a guide only.

Couples**

It’s important to note that these figures estimate how much you would need to retire today. Accounting for inflation, the actual figures at time of retirement will differ, but should be equivalent to the current value of the above figures.

**Rounded to the nearest dollar.

How much KiwiSaver should I have at my age?

Calculating how much KiwiSaver you should have, by age, is tricky and there’s no one definitive answer.

However, if you’re a 30-year-old with a minimal KiwiSaver balance, you’re obviously in a far better position to save for a comfortable retirement than a 50-year-old with the same sum saved.

The key is to start saving early, to save as much as possible and to be proactive about checking your KiwiSaver fund’s progress.

Find the right KiwiSaver fund for you

Ultimately, if you’re concerned about having enough money for your retirement, you should start doing something about it now. And one of the easiest and quickest things you can do is to compare your current KiwiSaver provider against others in the market.

Do you know what returns you’ve earned over the past year, and the fees you’ve paid? If you are in the wrong fund, you could be missing out on better returns on your investments.

Here at Canstar, we can help you find the right KiwiSaver fund for your needs. While it can be hard to predict the future, looking to the past can help you make informed choices. With our helpful comparison tool, you can see the past one-year, three-year, five-year, and even seven-year returns of all the available funds, alongside other information such as annual fees, termination fees, added features, and the Canstar star rating. To learn more or to start comparing click the button below:

Compare KiwiSaver funds

About the author of this page

Bruce Pitchers is Canstar NZ’s Content Manager. An experienced finance reporter, he has three decades’ experience as a journalist and has worked for major media companies in Australia, the UK and NZ, including ACP, Are Media, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. As a freelancer, he has +worked for The Australian Financial Review, the NZ Financial Markets Authority and major banks and investment companies on both sides of the Tasman.
In his role at Canstar, he has been a regular commentator in the NZ media, including on the Driven, Stuff and One Roof websites, the NZ Herald, Radio NZ, and Newstalk ZB.
Away from Canstar, Bruce creates puzzles for magazines and newspapers, including Woman’s Day and New Idea. He is also the co-author of the murder-mystery book 5 Minute Murder.