How the retirement calculators work

Your retirement pay

Your retirement pay is the most you could spend each week, the same amount in today’s dollars every year, from when you retire to your planning age (95 by default), counting NZ Super, any work or rent after tax, and a draw from your savings. We find it in 1,000 simulated markets and report the amount 9 in 10 of them can hold. Beside it we show a very poor market (the pay that holds in 19 in 20 markets, the worst 1 in 20), the typical market (the middle result) and the fixed-return view.

If you retire before 65 and your savings outside KiwiSaver cannot carry that pay until KiwiSaver opens, we show two figures: a lower bridge pay until 65 and your pay from 65.

Simulated markets

Each market is a run of yearly returns drawn from a lognormal distribution whose average is the Schedule 7A return for your fund type, with a swing (standard deviation) that is our assumption, shown below and editable. Inflation is held at 2%. The same seeded set of markets is used everywhere, so the static pages, the tests and your browser give identical results.

One effect of the 9 in 10 measure is worth knowing. A fixed sum that arrives later, such as an inheritance at 85 or money from downsizing at 75, can lift the safe pay a little more than the same sum arriving earlier, because later money is not exposed to years of market risk before you need it. In a typical market the opposite holds: earlier money adds more, because it has longer to earn. For our example couple, $100,000 at 85 lifts the safe pay slightly more than $100,000 at 70, and $100,000 at 70 lifts the typical pay more. This is intended, and one of our checks confirms it.

Because savings in each market move in a straight line with the pay you choose, we can work out the highest pay every market can hold exactly, in one pass, and the extra saving each market needs. There is no trial and error.

KiwiSaver, savings and tax

KiwiSaver contributions come from the kiwisavercalculator.co.nz engine year by year: yours, your employer’s after ESCT, the government contribution until 65, and the move to 4% on 1 April 2028 (each model year starts today, so the step is blended by month). NZ Super is paid from 65 even if you are still working, taxed on top of your salary and added to your savings. With fixed returns, our path matches it to the cent. KiwiSaver stays locked until 65; other savings can be used at any time.

NZ Super is paid at the net rates in law, not worked out from gross. Wages and rent are taxed on top of NZ Super at year-end rates with the PAYE engine shared with payecalculator.co.nz, including the ACC earners’ levy on wages. Tax thresholds are held level in today’s dollars.

Formulas

Real return

r = (1 + h) / (1 + d) - 1, where h is the return after fees and tax and d is inflation

Schedule 7A weekly income (payments mid-year)

R = b x (7 / 365.25) x ((h - d) x (1 + h)^(n - 0.5)) / ((1 + d)^0.5 x ((1 + h)^n - (1 + d)^n))

Massey lump sum

L = G x (365.25 / 7) x (1 - (1 + r)^-n) / r, with 3.5% returns, 2% inflation and n = 25

Years a lump lasts

n = -ln(1 - L x r / W) / ln(1 + r); for ever if L x r >= W

Highest pay a market can hold

available savings = A + x X - P C at every check; P = min(A / C) over the checks, where C is the pay that has been drawn so far, grown by that market’s returns

Lognormal returns

s^2 = ln(1 + v^2 / (1 + g)^2); mu = ln(1 + g) - s^2 / 2; each year’s return is exp(mu + s z) - 1, so the average is g and the swing v

Guardrails (our plan-relative rule)

starting pay = the safe pay (9 in 10 markets); planned balance at each age = the balance that pay leaves with fixed returns; each year, cut pay 10% if actual < 0.8 x planned; raise 10% if actual > 1.2 x planned; after any change, the plan is reset to the new pay from that year’s balance; at most one change a year; never below NZ Super alone; no change once planned balance < 2 x planned yearly draw

What we leave out

• Means-tested help (Accommodation Supplement, Disability Allowance) and the grandparented partner-included NZ Super rate.
• Overseas pensions, which can reduce NZ Super, and the Social Security Agreement routes to meeting the residence rule.
• The 1 April 2027 NZ Super and Winter Energy Payment rates, which were not published as at 12 November 2026.
• Reverse mortgages and other home equity release products, which we describe but do not model.
• Changes in tax thresholds, PIR switching in retirement, and inflation that differs from 2%.
• Full Stats NZ cohort life tables by single year of birth; we use the published points for four birth years and interpolate.