How the retirement navigator works

This tool helps you plan your retirement spending by guiding you to one of four ‘rules of thumb’ to help you work out how to draw down your invested savings gradually over your retirement span. These four options are the 4%, 6%, fixed date and life expectancy approaches, and you can learn more about these in our guide.  

It then shows you how drawing down on your invested savings according to a specific rule of thumb plays out financially each year in retirement. It also allows you to adjust scenarios to visualise how each would affect your income. 

The retirement navigator does this in the following steps: 

• It helps manage two main risks you could face in retirement: spending too much and outliving your savings or spending too little and compromising your quality of life.
• It supports you to consider your retirement span and provides an estimate of what a shorter, average or longer retirement could look like based on life expectancy data (more on the assumptions below). 
• It then asks you to enter the amount you anticipate having saved to invest and generate an income from during retirement, with the caveat being not to include any short-term money for emergency savings, or for goals and needs such as travel and home maintenance.
• Next, it takes in your preferences and plays them back to you, before displaying a result based on the most relevant rule of thumb. 
• The results include an initial income amount and how long it’s projected to last, as well as a graph that assists you to visualise your income in retirement. 

The tool also includes a variety of features, including support for how to set up regular withdrawals with fund providers in line with any given rule of thumb, as well as the opportunity to save your results and email them to yourself to refer back to.  

The retirement navigator relies on these assumptions 

Retirement spans

• To help you estimate how long a retirement to plan for (ie, your life expectancy), we used Stats NZ New Zealand Complete Cohort Life Tables (1876–2021), released in March 2023, and extrapolated death rates after age 100 to age 120.  
• We used median scenario death rates for the relevant cohort aged 65, or 70 for the ‘starting older’ model in 2023, born in 1958 or 1953 respectively. 
• Stats NZ’s life expectancy data is collected and arranged by biological sex at birth.
• The retirement navigator collects your gender selection in order to provide you with a shorter, average or longer life expectancy age.   
• Your gender selection is not recorded or stored beyond this tool.   
• If you choose ‘Another gender’ or ‘Prefer not to say’, the retirement navigator will display the shorter, average and longer life spans of a female. This is due to the New Zealand Society of Actuaries’ recommendations in response to current data limitations.
• You can also use Stats NZ’s How long will I live? calculator to get a more precise idea for yourself and use the information it gives you in the retirement navigator.

Fund types

• The navigator displays outcomes from three fund types: conservative, balanced and growth.  
• The assumed percentages of growth assets (shares) and income assets (bonds, cash) in each of the three fund types are shown in the table below. 

Investment returns 

• Investment returns for each fund type are assumed to be normally distributed.
• The expected long-term geometric average return and standard deviations of that return for each fund type are shown in the table below.
• We have estimated these future investment returns and standard deviations, taking a view on a time horizon of 10 years or more and bearing in mind current market expectations. 
• Standard deviation measures the volatility of investment returns. Retirees’ invested savings are particularly sensitive to these ups and downs in returns, even if invested in conservative funds. We see fluctuations in the returns from income assets (bonds, fixed interest) as well as growth assets (shares).
• The fund returns are shown net of an allowance for investment management wholesale fees and retail KiwiSaver administration fees.
• Note that for each fund type, the overall expected returns are 1% a year higher than the assumptions in our other Sorted tools and across the sector as prescribed by regulations. Point-estimate assumptions for standard deviations are not currently prescribed across the sector. 

Inflation

• Our expected rate of inflation is 2% a year. This is consistent with the mid-point of the Reserve Bank of New Zealand’s target and heightened current inflation. 

Disclaimer

• Our Sorted tools and calculators are for personal use only. The information shown is not personalised financial advice, nor advice to invest in a specific fund. 
• The data is stored entirely separately from your personal credentials and remains completely anonymous (ie, nothing can be identified). The non-identifiable data is stored on secure systems. Here’s our privacy policy.  
• The returns used to calculate retirement income are illustrative only and do not reflect the actual or prospective performance of any KiwiSaver scheme or investment fund. 
• The returns to members of a KiwiSaver scheme are subject to investment and other risks, including loss of income and principal invested, and are not guaranteed. Returns will vary depending on the investment performance of the chosen investment fund or funds. 
• We do not accept any liability for any loss or damage of any kind arising out of the use of, or reliance on, the information provided on these pages, including, without limitation, any loss of profit or other damage, direct or consequential.