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Summary of assumptions used in the calculation of KiwiSaver retirement projections

 

The projections of your KiwiSaver account balance at retirement age (currently 65) and the after-tax weekly income it will generate for you in retirement are presented in today's dollars and are estimates only. They do not take into account any other personal assets you may own outside of KiwiSaver and are based on a single person to avoid overestimating your retirement income and expenses.

These are subject to a number of assumptions about your KiwiSaver account in the future that may differ from your actual behavior up to and in retirement.

They do not constitute financial advice to anyone. Neither Fisher Funds nor the Supervisor guarantees the estimates nor accept any liability for any loss or damage of any kind arising out of the use of, or reliance on, the information provided in these estimates including, without limitation, any loss of profit or other damage, direct or consequential.

The estimates are based on the following assumptions:

  Method of calculation

1Your estimated KiwiSaver account balance at age 65

  • Your estimated KiwiSaver account balance at age 65 is presented in today's dollars and is based on your contribution history over the last 12 months. It assumes you continue to save as you are now until age 65, your investment strategy does not change and you do not make any withdrawals.
  • The projected returns we've used are based on our assessment of current and likely future economic and investment market conditions. The figures are estimates only and they do not reflect the actual or prospective performance of any investment strategy or Fund. They do not take into account any additional return that Fisher Funds may add through picking investments that do better than broad market averages.
  • We have also made an allowance for wage/salary increases (if applicable) of 3% per annum over time.  No increase is applied to voluntary contributions.

2Your estimated after-tax income in retirement

  • Your estimated after-tax income in retirement is based on your retirement savings lasting in line with your life expectancy as per Statistics New Zealand Life Expectancy Estimates.
  • It also also assumes your savings continue to be invested throughout your retirement and if necessary your investment strategy is adjusted at age 65 to a strategy that we believe is appropriate for a person of that age with an average attitude to risk. If your KiwiSaver account savings are invested in more than 55% of the Growth Fund, then the investment mix  revised to 55% Growth Fund and 45% Conservative Fund to achieve a balanced investment strategy. It is sensible for most people to reduce the level of risk in their investments as they get closer to retirement or are in retirement.

3The cost of a comfortable retirement

4New Zealand superannuation payment

  • The New Zealand superannuation payment of $400.87 is based on the after tax ('M' tax code) rate for a single person living alone. We've used this rate to avoid overestimating your retirement income. This payment begins when you turn 65 and continues for the period of time you could be expected to live.
  • More information on New Zealand, superannuation payment rates can be found here

Inflation

  • The results shown are in today's dollars. This means that the actual dollar amounts that you pay or receive in the future are likely to be more than the figures shown, but the figures shown will have the same buying power as today.
  • For example, if you could buy something worth $1,000 now, in 10 years' time, you would need $1,220 to buy that same thing (assuming 2% inflation - midpoint of the Government's long term range for inflation of between 1% and 3%).

Contributions

  • One-off lump sum investments over $1,500 made in the year to 31 March 2018 have been included in your KiwiSaver account balance but have been excluded from the calculation of your future contributions due to uncertainty over their likely frequency and amount.
  • If you select that you are employed, your salary increase by 3% per annum until your retirement age.

Returns

  • The annual after fees and tax return applied to savings invested in the various funds are as follows:
    Conservative Fund 2.59%
    Balanced Fund 4.10%
    Growth Fund 5.34%
  • A prescribed investor tax rate of 28% has been assumed.

Rounding

  • For simplicity, some numbers have been rounded up or down to the nearest dollar.

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