HOW . . . much will I have in my KiwiSaver account when I retire?

SUCH A simple question, but such a complicated and unsatisfying answer. As with life expectancy, it is possible to plug in a few variables into a calculator and it will spit out an answer, which is almost certainly not going to be correct.

Life is complicated, bubbles and busts are a part of the markets in which KiwiSaver money is invested and the future is uncertain.

But KiwiSaver calculators, once you understand they are only ever going to produce a ball-park number, are helpful in your personal retirement planning.

Take the Sorted KiwiSaver Calculator (sorted.org.nz). It will provide you with that ball-park figure.

In the case of a woman born in January 1980, currently expected to live until the age of 90, saving the minimum 3 per cent of her gross income of $55,000, matched by the minimum employer contribution of 3 per cent, and assuming a net real return from a balanced fund of either 3.1 per cent, 3.6 per cent or 4 per cent depending on your tax rate.

The sum saved by the age of 65 will be $212,020.

Note the $20 on the end of that number. Unerringly specific, isn’t it? What could disrupt that figure? Well, behind the calculator, there are a lot of assumptions, and if they turn out to be wrong in a person’s individual case, then the outcome is going to be different.

One assumption, for example, is that people’s income will increase by 3.5 per cent a year.

Another is that you are in a balanced fund and have not opted for cash or growth.

Higher inflation, lower or higher per-annual real investment returns, periods of non-saving (unemployment, contribution holidays, etc), changes to the way your savings are taxed, and Government tinkering with KiwiSaver are among those that may reasonably be considered reasonably likely to occur. But don’t despair. Just keep revisiting your planning every year or so.

Also, there are things you can control, such as your rate of contribution, whether you choose a high-fee or low-fee fund or a passive or active approach, and there are things you cannot control.

Focusing on the things you have some say in is the only real option. For example, if the woman above increases her contribution to 8 per cent, this lifts the amount the calculator projects she will have saved by 65 to $384,457.

Even lifting her savings rate from 3 per cent to 4 per cent lifts it to $244,272.