Living Well In Retirement: The Right Fund Type Can Get You There For Less

The latest NZ Retirement Expenditure Guidelines from Te Kunenga ki Pūrehuroa Massey University were released this week and show the recommended amount Kiwis will need to save for retirement. The study, which models various scenarios, suggests one person living in a metro area will need $183,000 in savings to live till 90 with ‘no frills’, and a couple in the provinces will need $446,000 to fund their retirement, if they want a few more luxuries.

But the report also shows the significant difference your KiwiSaver fund type can make to your financial situation.

Says Generate KiwiSaver adviser Stephanie Whittaker:

“We know that choosing the right fund type, such as a growth fund* instead of a balanced fund for long-term savings, can have a huge impact – and this latest report shows that in black and white.”

The report calculated that to save up enough to maintain the one-person, no-frills lifestyle in a Metro area (supplementing NZ superannuation with your KiwiSaver savings), you’d need to put aside $51 per week from age 25 to 65, if you were in a balanced KiwiSaver fund. Whereas if you had selected to invest in a growth fund from the start, you’d only need to set aside $38 per week - for the same result.

That’s $13 less you’d need to save every week – or $27,040 over 40 years.

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The report also calculated the difference if you were in a two-person household in a provincial area, living the ‘choices’ lifestyle (with a few more luxuries). In that situation, you’d need to put aside $135 per week from age 25 to 65 if you were in a balanced KiwiSaver fund. Whereas if you were simply in a growth fund from the start, you’d only need to set aside $104 per week - for the same result.

That’s $31per week less – or $64,480 over 40 years!

“Getting the right advice from the start can make a significant difference,” says Whittaker.

“We know that many Kiwis are concerned about the cost of living and being able to set enough money aside for their retirement. These figures should give them some comfort that they don’t necessarily need to put in more money, they just need their money to work smarter and harder for them.

“On the other hand, if they are able to set aside the larger amount shown in the table, if they’re investing in a growth fund they can look forward to an even bigger nest egg at retirement – potentially taking them from the ‘no frills’ lifestyle to the ‘choices’ one.”

What’s more, the quality of your KiwiSaver provider can push this differential even further.

“While the report uses the assumptions provided by the government for fund return rates, which is 4.5% for a growth fund, our Generate growth fund in fact returned 9.3% over the past 10 years**, which is significantly higher,” says Whittaker. “We’re proud of our excellent long-term performance and the difference it can make to Kiwis’ retirement nest eggs.”

* Growth funds entail more risk, but over the long term these ups and downs are smoothed out. Because KiwiSaver is a long-term investment, a growth fund is often the best choice. Speaking to a KiwiSaver adviser can help you determine what’s the best fund type for you.

** Source: Morningstar KiwiSaver Survey September Quarter End 2024. The Generate Growth Fund ranked 2nd out of 13 NZ Multi Sector Growth Category Funds with a return 9.3% for a period of 10 years as of 30/09/2024. © 2025 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution in New Zealand. Past performance does not guarantee future returns. Investment involves risk and returns can be negative as well as positive.

The issuer of the scheme is Generate Investment Management Limited. To see a copy of the PDS visit generatekiwisaver.co.nz/disclosures

Past performance does not guarantee future returns.

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