5% is the magic savings number

Actuaries think KiwiSaver statements should display the adequacy of savings rates and balances in providing income in retirement and that this may require regulating.

There are various different methods of estimating likely retirement income but the New Zealand Society of Actuaries (NZSA) says basing the information on an individual KiwiSaver’s actual net income after KiwiSaver contributions would provide the best indication to individuals.

This method could also be applied consistently to all KiwiSaver accounts, the NZSA says.

Modelling by NZSA’s Retirement Income Interest Group (RIIG) finds that a savings rate of 5% of net income after KiwiSaver contributions, matched by an equal employer contribution, would be sufficient to provide a retirement income of between 80% and 100% of the KiwiSaver’s pre-retirement income and with that income lasting to at least age 90.