Calculators: FaQ
What does the Kiwisaver Calculator do?
Our KiwiSaver Calculator calculates the amount of money you are estimated to receive at your ideal age of retirement (assuming this age is 65 or over). We also break down this retirement lump sum into ideal weekly allowance that would allow you to get maximum gain from your investment while still having enough money to last during your retirement. This allowance includes return for an assumed conservative fund, while taking into account the reduction of the account balance as weekly withdrawals are made.
- We are assuming the government recommended rate of inflation which is 2%.
- We assume that if you are employed, each year your salary increases by the government recommended rate of 3.5% (an adjustment to account for inflation).
- We assume that if you are self employed, your contributions also increase by this government recommended rate of 3.5%.
- We assume that at no time do you suspend your savings or contributions to your KiwiSaver account.
- We factor in your PIR rate and fund type to calculate the return your account generates. If you do not know these, we assume a conservative fund and a PIR rate of 28%.
How does it work?
We take your situation, based on your age and ideal retirement age, as well as your annual income and current KiwiSaver balance in order to determine the factors that will contribute to your KiwiSaver. These factors include the amount of money you will be provided with from the government contribution, if you are employed, the tax on your employers contribution, and your contribution amount to your KiwiSaver annually. Using each of these factors we determine an estimation of the lump sum you will have access to at your ideal retirement age and an ideal weekly allowance. This allowance is based on the time between retirement and age 90, and the returns you will receive throughout this time. Both your estimated final balance and weekly allowance factor in inflation, giving you a more accurate depiction of your KiwiSaver worth at the time you receive it.
Adjusting for inflation?
Inflation is the decrease in the buying power of money. Each year, money's value is said to decrease by 2%, shown in the steadily increasing prices of goods and resources. It is important to take inflation into account as, overtime, your KiwiSaver earnings might not be worth what we assume it would be today. For example, you might have $100,000 in your KiwiSaver account when you reach your ideal retirement age, however, being perhaps 25 years from now, this would only be able to buy around $61000 of todays goods due to the decreased value of money and increased price of those items over time.
