Are you contributing enough to your KiwiSaver?

Have you ever stopped and thought about your retirement and the lifestyle you’d like to achieve? How much KiwiSaver money would you need, on top of NZ Superannuation?

Figuring out how much you’ll need to fund your retirement can certainly be difficult. That’s why we’ve put together some helpful hints and tips to get you started. And of course, don’t hesitate to contact us if you need any help.

NZ Superannuation – Total expenses =?

As you know, the actual cost of retirement varies from person to person. It depends on your unique situation, your needs and long-term goals. But to give you a rough idea of the figures you might expect, we think you will appreciate a practical point-of-view.

So let’s run some numbers, taking an average 65+ year-old couple as an example: Jack and Jill. Both qualify for NZ Superannuation, with their household being entitled to $1,200.60 every fortnight ($31,215.60 per annum in NZ Super). Turning now to the expenditure side, Jack and Jill are likely to spend between $1,012.33 and 1,091.77 per week, which equates to $52.641 – $56,772 per annum*. In a nutshell, our retired couple will have to find ways to fund $21,425 – $25,556 per year.

So, how much KiwiSaver money do they need?

As we said earlier, if NZ Super is Jack and Jill’s only income, they will somehow need to make up the difference of $21,425 – $25,556 per year – in every year of retirement.

KiwiSaver is one of the options. Now, let’s assume that they’re KiwiSaver members and have money invested in a Balanced Fund with a real (after tax) rate of return of 6%. As the table below shows, assuming that they retire this year, both aged 65, Jack and Jill will need $500,000 in their combined KiwiSaver accounts.

 

 

Now, $500,000 may sound too much or too little for you: it’s all about your personal goals. This is why it’s so important to assess your personal situation, the performance of the fund you’re investing in, and how this will affect your retirement goals.

 

Like to discuss this further? Always feel free to get in touch. We can help you make smart decisions about your future.

*** This is what a two-person household spends on average, according to the New Zealand Retirement Expenditure Guidelines 2015. Keep in mind that this model takes into account both necessities (food, transport, household energy etc.) and ‘luxuries and treats’ (recreation and culture, alcohol and tobacco, clothing and footwear, etc.), whereas large purchases, regular plans or expenses (i.e. home renovations, travels, etc.) are not included.

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