Inflation in retirement: today's dollars and how NZ Super keeps up

Inflation is the quiet cost of a long retirement. At 2% a year, prices rise by about half in 20 years: spending of $500 a week today will cost about $743 a week when you are 20 years older. That is why every figure on this site is in today's dollars: $500 a week at 85 means what $500 buys now. NZ Super is protected against inflation by law. Each 1 April it rises with the consumer price index, and the couple rate must stay at or above 66% of the net average wage, so in years when wages outpace prices it can rise faster. We assume it only keeps up with prices, which is cautious. Rules checked 12 November 2026.

What inflation does over a retirement

Retirement can last 30 years or more, so even modest inflation adds up. At 2% a year, the assumption used in Schedule 7A of the Financial Markets Conduct Regulations 2014 and by Sorted:

If your income were fixed in dollars, by 85 it would buy about a third less. That is why a fixed-dollar drawdown such as Sorted's 6% rule front-loads spending: it pays more early and less, in real terms, later. Our safe withdrawal rate guide covers it.

Why we work in today's dollars

A projection in future dollars is hard to read. Being told you will have $351 a week from savings at 85 sounds fine until you remember what prices will be by then. Shown in today's dollars, that same amount is $236 a week, which is what it really buys.

So all our calculators work in real terms, as Sorted does ("All results are net of fees, taxes, and adjusted for inflation") and as KiwiSaver statements do. In practice:

• Your savings grow at the return after fees and tax less 2% inflation. After 65 the official 2.5% return is a real return of about 0.5% a year.
• Your spending is entered at today's prices and stays at today's prices. If you choose to spend less as you age, that is a real cut, not an inflation effect.
• NZ Super stays at today's net rate in real terms, so it rises with prices.
• Tax thresholds are held level in today's dollars, our assumption.
• The Massey spending figures are shown as published, at 30 June 2025 prices.

When you actually retire, lift your withdrawals each year by inflation to keep the same real pay. A weekly draw of $236 in year one becomes about $241 in year two at 2% inflation.

How NZ Super is adjusted each April

NZ Super rates are set in law as after-tax (net) amounts. MSD's response to an Official Information Act request (10 December 2024) quotes sections 15 and 16 of the New Zealand Superannuation and Retirement Income Act 2001, which work like this each 1 April:

1. Prices. Net rates rise by the increase in the all groups consumer price index for the year to the previous December quarter, if it went up.
2. Wage band. The combined net rate for a married couple must be at least 66% and at most 72.5% of the net average ordinary time weekly wage, from Stats NZ's Quarterly Employment Survey.
3. Single rates. A single person living alone gets 65% of the couple combined rate; a single person sharing gets 60%.

MSD's worked example for April 2024: prices rose 4.66%, lifting each partner's weekly rate from $381.82 to $399.59 and the couple rate to $799.18. That was 67.02% of the net average wage of $1,192.40, above the 66% floor, so no further rise was needed.

Recent increases

The 2026 rates are the latest. The 1 April 2027 rates had not been published when we checked on 12 November 2026. Our NZ Super rates guide lists every current rate.

Prices or wages: the difference it makes

Because of the 66% floor, NZ Super tends to rise faster than prices whenever real wages grow for long enough. Schedule 7A assumes wages grow 3.5% a year against 2% inflation. If NZ Super followed wages at that pace, here is the single living alone rate in today's dollars:

For a whole plan the effect is large. Our example couple, both 55 today with $250,000 in KiwiSaver between them and $50,000 of other savings, retiring at 65 and planning to 95, has a retirement pay of $1,052 a week in 9 of 10 markets with NZ Super rising with prices. With NZ Super rising with wages it is $1,430 a week.

We default to prices because it is cautious: the wage floor only lifts NZ Super when it binds, real wage growth is not guaranteed, and the rules can be changed by Parliament. You can switch to wages under "NZ Super settings" in the retirement pay calculator, and check your current rate with the NZ Super calculator.

When inflation runs above 2%

Two per cent is a long-run assumption, not a promise. The NZ Super increases above show prices rising 4.66% in the year to December 2023 and 3.11% in the year to December 2025, both above 2%. A few years like that early in retirement can matter as much as a poor run in markets.

Here is how the pieces of a typical retirement income respond when inflation is higher than expected:

• NZ Super catches up each 1 April, a few months behind prices. Over a year you lose a little buying power, then get it back.
• Your savings only keep up if their returns rise with inflation. Cash and bonds may lag; shares and property have a better long-run record but can fall when inflation surprises.
• Fixed-dollar income, such as a rent you charge on a long lease or a fixed-dollar withdrawal, loses buying power straight away.
• Your costs may rise faster or slower than the CPI, which measures an average household's spending.

The simplest defence is flexibility: a spending plan with some extras you can trim in a high-inflation year, and a yearly review. Our calculators let you test a lower return or higher spending to see how much room you have.

Spending that falls with age is not inflation

Our main calculator assumes, as our own judgement, that you spend 100% of your chosen amount until 75, 90% from 75 to 85 and 80% after 85, all in today's dollars. That is a real fall in spending, as many retirees travel and buy less in later life. It sits on top of inflation, not instead of it: your spending at 85 is still lifted for price rises, just from a lower base. You can change these shares, or set them all to 100%, under "Spending by age".

Protecting your retirement from inflation

• Lean on NZ Super. It is the one income most retirees have that is linked to prices by law. The larger its share of your income, the less inflation can hurt.
• Keep some growth. Cash and term deposits may not keep up with prices after tax. Some growth assets in your savings help, at the cost of more swings. See our fund type guide.
• Index your withdrawals. Raise your regular withdrawal once a year by inflation, or use a rule such as guardrails that keeps a real amount.
• Watch your own costs. Rates, insurance, power and rent can rise faster than the CPI. If you rent, our renting calculator lets you set rent to grow faster than prices.
• Review yearly. Rerun your numbers each April when NZ Super changes.

This is general information, not financial advice.

Questions

What does "today's dollars" mean?

It means every future amount is shown at today's prices, with 2% yearly inflation taken out. $500 a week at 85 in today's dollars buys what $500 buys now.

Does NZ Super keep up with inflation?

Yes, by law. Each 1 April net rates rise with the consumer price index, and the couple rate must be at least 66% of the net average wage, so it can rise faster than prices.

What inflation rate do you assume?

2% a year, the rate in Schedule 7A of the Financial Markets Conduct Regulations 2014, which KiwiSaver statements and Sorted also use.

Why does your calculator not show NZ Super going up?

Because it works in today's dollars. NZ Super rising with prices shows as a flat line. If you choose the wages option, it rises above that line.