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.
Research from Massey University for retirees who own their own homes breaks it down into budgets covering two lifestyles, across city and rural dwellers:
- 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
Status | Main centres: | Main centres: | Regions: | Regions: |
Individual | $705 | $791 | $581 | $772 |
Couple | $937 | $1780 | $1061 | $1243 |
Annual income
Status | Main centres: | Main centres: | Regions: | Regions: |
Individual | $36,678 | $41,112 | $30,199 | $40,138 |
Couple | $48,744 | $92,577 | $55,154 | $64,657 |
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. The gaps between expected costs and superannuation are:
Annual shortfall
Status | Main centres: | Main centres: | Regions: | Regions: |
Individual | $7810 | $12,244 | $1331 | $11,270 |
Couple | $4332 | $48,164 | $10,741 | $20,245 |
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 below are based on the assumptions that:
- You own your own home,
- Have no other source of income besides NZ Super,
- No other forms of savings besides KiwiSaver and
- Your KiwiSaver balance continues to grow at the same rate as inflation
Singles
Retirement length | Main centres: | Main centres: | Regions: | Regions: |
10 years | $78,099 | $122,444 | $13,312 | $112,705 |
20 years | $156,198 | $244,889 | $26,624 | $225,410 |
30 years | $234,296 | $367,333 | $39,936 | $338,114 |
Male to 80 | $117,148 | $183,667 | $19,968 | $169,057 |
Female to 83.5 | $144,483 | $226,522 | $24,627 | $208,504 |
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
Retirement length | Main centres: | Main centres: | Regions: | Regions: |
10 years | $43,316 | $481,645 | $107,416 | $202,452 |
20 years | $86,632 | $963,290 | $214,833 | $404,903 |
30 years | $129,948 | $1,444,934 | $322,249 | $607,355 |
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.
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 minimal KiwiSaver, you're obviously in a far better position to save for a comfortable retirement than a 50-year-old in the same situation.
The key is to start saving early, to save as much as possible and to be proactive about checking your KiwiSaver fund's progress.
For more information the current average KiwiSaver balances by age click here!