Making the numbers count

Trish Oakley 
May 2024 

I can almost feel your excitement… “Yay, another email or letter from my KiwiSaver provider! I wonder what important things they are telling me now?!”

I totally get it. I live a busy life too and somewhere in between juggling work and bringing up children, feeding the family, managing the bills and all the little curve balls any given day can deliver, if the choice is a relaxing cuppa or reviewing the mail, well, I get why people choose the cuppa.

But like many of my colleagues across the industry at this time of year, we are likely to tell you that we do want to grab a little of your headspace and cuppa relaxation time in coming weeks. Why now? Because hitting an inbox or mail tray near you is your annual member statement and within it there are two important numbers.

Firstly, what you are on track to receive as a lump sum and, secondly, what that lump sum could convert to as a weekly income until you reach age 90. These numbers are, of course, estimates, and the result will no doubt vary as markets deliver their cycles and you change your job and contributions over time. But just like our annual check-ups at the doctor, this is your chance to see how you are going with your retirement savings.

The numbers you see are not a guarantee. They take your balance and contributions, they look at your investment choice and apply some assumptions around returns and inflation. The assumptions are legislated. While many may have views about the inflation number and return figures used, that they are standardised across KiwiSaver Providers is a good thing. It means Providers can’t apply their own views around what markets will deliver for a balanced fund over say 20 years for example. But what Providers can and do do, is deliver you the cold hard facts of what you are estimated to accumulate come 65. 

A couple of years ago, having opened my statement and done the math of what I might spend in retirement, I looked at the numbers and the two just didn’t add up. Quite simply, I didn’t have enough for the lifestyle I envisage in retirement and needed to do something about it. I really wish I had done this math earlier. 

If you find yourself in a similar position but are not quite sure what different contribution levels will mean to the end result you might get, then a visit to sorted.org.nz is well worth it. They have a great calculator that enables you to try different contribution rates and fund types helping highlight quickly what difference it can make.

Also included in the statement will be returns and fee information. Before you rush into the dinner party compare and contrast conversation, remember this will be relative to the investment choices that you have made. Are you in an actively managed fund or a passive tracker following the market index? How have the markets gone in the past year? Are you a Conservative, Balanced or Growth investor? Even as someone who works in the industry, you may be surprised to know my Financial Adviser and I sit down each year and review my KiwiSaver choices to make sure they remain aligned to my investor profile. We consider the markets and associated data, the asset classes I have invested in and views around the same. We unpack the noise that hits my news feed about economies and markets every day and consider it from big picture themes that are relevant to my investment needs.  If I need to make changes that is dealt with then and there. Simple, easy, done and best of all, I am not paying a fee for this annual review service (though I do encourage you to check directly with your own Provider as fee arrangements may vary).

Last month I mused on Larry Fink’s annual chairman’s letter to investors. He reflected on his parents having “a secure, well-earned retirement” and observed that saving for, and enjoying retirement is much harder today than it was 30 years ago and it will be harder again 30 years from now.

It doesn’t have to be though: rather than let the mail pile up on the kitchen table or overload the inbox, take some time this year to review your annual member statement and the numbers within, talk to a Financial Adviser and make the changes you need for the secure well-earned retirement. Your future self will thank you.

This is not a recommendation to buy or sell any financial product and does not take your personal circumstances into account. All opinions reflect judgement on the date of communication and may change without notice. We recommend you take financial advice before making investment decisions. We have prepared this web page in good faith based on information obtained from other sources, but we do not guarantee the accuracy of that information. We do not make any representation or warranty (express or implied) that this web page is accurate, complete, or current and to the maximum extent permitted by law disclaim any liability for loss which may be incurred by any person relying on this web page.