In Australia, it has been suggested that super fund members are being poorly served by calculators that do not consider volatility.

Challenger Retirement Income chairman Jeremy Cooper said the tools used long-term average investment returns as a constant compounding factor.

“They assume that the long-term average happens each and every year when we all know it does not."

In New Zealand, the Commission for Financial Capability’s Sorted website is one of the leading sources of calculators.

It assumes inflation of 2% per year and that all retirement investments are in a managed balanced fund which is a PIE. The net real return is assumed to be 2.4% per year.

David Boyle, who is the Commission’s group manager of investor education, said there was an issue in making sure people understood the assumptions the calculators were based on.

He said they were designed to give a guideline but not a concrete outcome. “You can’t predict what the future is going to do around markets. You can only take a fair, actuarial assumption based on historical events and how markets have worked.”

Tools could also be developed to show people the probability of their returns and what fluctuations might mean for their long-term outcomes, he said.

“Saying a 3% after fees, tax and inflation return after 20 years doesn’t sound that exciting but it could be better or worse than that depending how markets go.  We are not investing in known rates of return.”