Median balance at 65 for KiwiSaver drawdown to current 50-year-olds

The Retirement Income Interest Group (RIIG) of the New Zealand Society of Actuaries modelled the distribution of future KiwiSaver balances to see how much today’s 45 to 59-year-olds could have available for drawdown in retirement.

The ‘Future KiwiSaver balances and implications for retirement policy’ report follows a RIIG July analysis which showed the current distribution of individual KiwiSaver accounts across the population aged 45 and over. Both use anonymised account-level data from a sample of KiwiSaver accounts from several providers.

Future KiwiSaver balances at age 65 will follow the picture of current balances, with a cluster of helpful, if modest, balances for most and some high balances. Leaving aside ongoing non-contributors, a quarter of contributing current 50-year-olds are estimated to have a KiwiSaver of less than $70,800 at age 65 and three-quarters less than $201,800 in present day values. The average of $164,900 is pulled up by the ‘tail’ of high balances, therefore the typical balance at age 65 is better represented by the median of $124,400, says the report.

The median balance estimated to accrue by age 65 for current contributing 45-year-olds is $156,900 compared to $72,400 for 59-year-olds. For non-contributing members who stay non-contributing, there is little, nil or even negative real growth expected from their current balances. The median balance at age 65 for persistent non-contributors is estimated to be $6,200 in present day terms for current 45-year-olds and $5,400 for current 59-year-olds. Low investment returns enable savings to just about keep pace with inflation but not much more.