New Zealanders can now, for the first time, “stress-test” their retirement savings against life’s variables such as: career breaks, changes to KiwiSaver contributions, and sharemarket volatility. This new capability allows New Zealanders to prepare for their retirement in a more effective way by not just estimating a lump sum at retirement but also showing how this equates to an income after retirement.
The new KiwiSaver Retirement Income Simulator, recently launched by Mercer, is the first online retirement tool in New Zealand that helps people plan their retirement savings during their working life and understand how to manage their savings throughout their retirement years.
The simulator allows KiwiSaver members to model future scenarios with a level of detail not available until now. It takes online retirement calculators to a whole new level by accommodating for variable and personal scenarios such as a partner’s income, income from non-KiwiSaver investments, and New Zealand Super entitlements. It helps people understand how they can produce a sustainable income throughout their retirement.
According to the Inland Revenue’s 2013 Annual Report, almost 40% of New Zealanders chose to withdraw all of their retirement savings as soon as they are able to do so and this is a concerning reflection on New Zealander’s approach to their retirement savings says Mercer’s New Zealand Managing Director, Martin Lewington.
“It’s not enough to have a lump sum figure in mind for retirement. People need a plan for managing their money throughout retirement if they want security that it will last.
“KiwiSaver members have to start thinking about not just the build-up to retirement, but what happens after they retire. Our online simulator can help them to do this.
“While there are some great tools out there already, we believe this one changes the game. It gives a much more comprehensive picture of how retirement can look,” he said.
The majority of New Zealanders are concerned they will not enjoy the same level of comfort in retirement as they currently do, but they have no idea how much is enough or how to get there, according to Mercer’s KiwiSaver Sentiment Index1.
“Most New Zealanders don’t have a clear picture on how much to save; how long they will have to work for; or what investment options they should be in at various stages of their life to maintain a quality of life they desire in retirement. Our online simulator can answer all of these questions for KiwiSaver members,” said Mr Lewington.
“Investment markets can be volatile but KiwiSaver members should have a realistic view of how market volatility will affect their savings over the short and long-term. Users can simulate different market conditions on our simulator, so they can make better-informed investment-based decisions.
“Alternatively, people can understand the impact of taking time out of the workforce to have a family or care for a family member, or how deferring their retirement, or changing their investment option out of the default option, can impact their retirement savings and therefore make a plan to manage it,” said Mr Lewington.
For Mercer KiwiSaver members, personal and account details are pre-populated into the simulator making it fast and easy to use. Others can use the simulator but their details will not be pre-populated.
Mercer’s Retirement Income Simulator can be experienced at: http://retirement.mercer.com.au/RetireReadyNZKS/
Mercer is a global leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 55,000 employees worldwide and annual revenue exceeding $12 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. Follow Mercer on Twitter @Mercer_NZ