Financial advisors National Capital have run the numbers to find out Kiwis will need around $425,750 in their KiwiSaver to receive $52,000 a year or $1,000 per week in their retirement income. These numbers highlight just how important it is for Kiwis to think about how they will get there.
“It's important to spend time figuring out your personal financial situation and how you can optimise it to reach your goal,” says Clive Fernandes, Director of National Capital KiwiSaver Advisers.
To receive $1,000 per week in your retirement income, you’ll get $672 per week from NZ Super (if you’re a couple) and therefore would need $328 from your KiwiSaver. This would give you $52,000 per year. If you’re taking $328 per week from KiwiSaver, this will require a lump sum of $425,750 at 65. This number is based on a few assumptions, including a 5% return after fees and taxes.
For single Kiwis who receive $403 from NZ Super, the same calculations showed that they need a lump sum of $775,450.
However, everyone’s situation will be slightly different. Factors such as additional income, unplanned or significant one-off expenses, and unforeseen changes to your financial circumstances means each Kiwis’ needs will be unique.
Clive notes how there are many aspects that need to be considered. “There isn’t really a one-size-fits-all approach, even if people have the same goal at retirement, they’ll likely need to take different actions to achieve it. That’s why we recommend getting personalised advice and recommendations.”
Getting personalised advice is as simple and easy as ever with National Capital’s free KiwiSaver HealthCheck.
KiwiSaver HealthCheck is a free online tool that only takes about 15 minutes to complete. It gathers key information to provide you with tailored advice on which KiwiSaver fund will be best for your needs.
By using KiwiSaver HealthCheck, over 1000 Kiwis have been given reassurance about their retirement savings. Kiwis have optimised over $70 million of their KiwiSaver retirement savings, thanks to National Capital’s help.
Before using KiwiSaver HealthCheck, Mark and Debbie had no idea how many different options were available to them.
Both in their mid-forties, they recently sought advice about their KiwiSaver funds. Being 20 years from retirement, they have a relatively long investment horizon but wanted to make sure they were getting the most out of their KiwiSaver. Mark has a higher volatility tolerance than Debbie but neither of them wanted to miss out any potential gains by re-balancing their portfolios.
Mark says, “We had a basic understanding of the different funds but wanted to make sure we were in the best funds for the long term.”
One recommendation that Debbie decided to implement was moving her existing KiwiSaver money in a Conservative Fund and investing all new contributions into a High Growth Fund. This allowed her to balance volatility and returns to allow her to have the required funds at the start of retirement while later in her retirement seeing higher returns from the Growth fund.
Following their personalised advice, Mark and Debbie are now in funds which suit their current situation and where they want to be during their retirement. They also understand how they may need to re-evaluate their strategy in the future, should their situation change.
Debbie says, “It’s good to know there are options for us and our KiwiSaver funds are definitely something we’ll revisit as we get closer to retirement or if there is a significant change to our current earnings and circumstances.”
Clive mentions how small changes to your KiwiSaver now can have a major impact for your retirement.
“Taking the time to seek advice and understanding the different funds available puts people on the right track to meet their retirement goals, whether that’s having $1,000 a week or a different amount, a plan helps people achieve that.”
What’s the process after KiwiSaver HealthCheck?
After you’ve completed your KiwiSaver HealthCheck, you are invited to book in for a free 15-minute call with an expert advisor. Before the call, National Capital will email you recommendations and written information which you can then discuss over the phone with your advisor. They’ll explain the recommendations and answer any questions you have.
This service is covered by the KiwiSaver providers, so it comes at no additional cost to you. Ultimately, you are able to consider the advice and decide whether you want to take up the recommendations or not.
Clive Fernandes says, “Most of the members who go through our advice process decide to implement our recommendations. They also ask us to monitor their KiwiSaver investment on their behalf and continue to give them ongoing support and advice.”
“It’s kind of a win-win-win. The KiwiSaver members get a plan to ensure they have enough money for retirement, the KiwiSaver providers get to offer a value-added service to their members, and we get one step closer to our goal of helping a million kiwis become financially secure.”
How do Kiwis feel knowing they have options?
“It’s good to know there are options for us and our KiwiSaver funds as we get closer to retirement,” says Debbie.
“Knowing how much we need to have when we retire and having a detailed plan in place to get it is great because it relieves our financial anxieties and gives us confidence we have made the right choice.”
“Since we have professional advisers doing the numbers for us, it makes it much less stressful when thinking about retirement.”
Having a KiwiSaver that works for your needs is super important as you’ve just found out! At Money Compare, our goal is to help you compare different KiwiSaver funds to see which one best suits you. We're a free service to help Kiwis compare what's out there! Check to see if your KiwiSaver is performing as good as it should be with help from our partners National Capital, it's never too late to switch to another provider!