It's hard to forecast tomorrow let alone estimate how much you will need to live off in old age. But having a ballpark figure is useful to the extent that it can help you be prepared.
When it comes to retirement planning, earlier is always better than later.
Several factors will influence your retirement needs. Among them inflation, your personal and professional circumstances, existing assets, potential inheritances, your lifestyle expectations and life expectancy.
Interest.co.nz has produced a retirement calculator that allows you to get a rough idea of how much your KiwiSaver investment might be worth and whether it's enough to retire on.
Keep in mind this is only a crude estimate and that a change in your life's circumstance can alter your real requirements. Financial advisers typically suggest that you discount the possibility of receiving New Zealand Superannuation as there is no guarantee of its long-term survival. There is also the possibility that the qualifying age could be extended as it has in Australia (and in other Western developed nations) or that it be means or asset tested.
The calculator has several variables that can be adjusted so you can create various retirement scenarios. One of these key variables in the assumed investment return. It's hard to get that one right given there are so many unknowns with a long-term investment such as KiwiSaver.
As a rough guide, The Retirement Commission on its sorted.org.nz website uses a net real return of 3.1 % after fees and taxes. It is often better to estimate on the conservative side rather than be overly optimistic.
Another point to bear in mind is that we have used current life expectancy tables. It is possible you could live longer or die sooner than our model suggests.
However imperfect, retirement savings predictions are useful to get a sense of how much you might need in retirement and where you are at. That information can inform your decision about funds you are invested in and, more importantly, the level of returns you'll need to target to have the kind of lifestyle you want in retirement.