Suppose you retire with a $400,000 balance, want to draw $25,000 a year on top of NZ Super, and expect a 3 percent return after inflation. In the first year the balance earns about $12,000 at 3 percent, but you withdraw $25,000, so it falls by $13,000 to roughly $387,000. Because your $25,000 drawdown is larger than the $12,000 the balance earns, the capital shrinks each year.
Running that forward year by year, the savings last about 23 years before they are exhausted. The drawdown is 6.3 percent of the starting balance, which is above the 3 percent return, so the gap is steadily eaten out of capital. After the 23 years you fall back on NZ Super, which pays for life regardless. If you trimmed the drawdown to around 3 percent, roughly $12,000, the balance would broadly sustain itself and the tool would show it lasting indefinitely. This is why a sustainable withdrawal rate matters as much as the size of the pot.
How it is calculated
The calculator runs your balance forward one year at a time. Each year it grows the balance by your expected return after inflation, then subtracts your annual drawdown, and it counts the years until the balance hits zero. Because the return is entered after inflation, the drawdown is in today’s dollars and keeps its buying power across the projection. When the drawdown is at or below the return, the balance is effectively self-sustaining and the tool reports it lasting 100 years or more. The drawdown rate shown is your annual withdrawal divided by the starting balance, a quick gauge of sustainability, where rates much above the return will deplete capital. NZ Superannuation is deliberately left out of the balance because it continues for life, so your savings only need to cover the income gap above it. Markets do not deliver a steady return each year, so treat the years figure as a planning guide rather than a guarantee.
Frequently asked questions
How long will my retirement savings last?
It depends on how much you draw each year and what return your balance earns. Drawing more than the return erodes the capital; this tool runs the balance forward year by year until it is exhausted. Remember NZ Super continues for life regardless, so your savings only need to cover the gap above it.
What is the NZ Super rate in 2025 and 2026?
NZ Super rates are adjusted each April. For the year to 31 March 2026, a single person living alone receives $496.37 per fortnight after tax at the M rate, and a couple (both qualifying) receives $381.42 each per fortnight after tax at the M rate. These figures come from Work and Income New Zealand and are indexed to average wages, so they rise slightly each year. Because NZ Super is paid for life, it acts as a floor under your retirement income regardless of how long your KiwiSaver or other savings last.
How does KiwiSaver affect retirement drawdown?
KiwiSaver balances are accessible from age 65 (or on the date you joined, if you joined before 1 July 2019 and are now 65). You can withdraw the full balance as a lump sum, set up regular withdrawals through your provider, or roll it into a managed fund that pays regular income. IRD does not tax the withdrawal itself, but investment returns inside KiwiSaver are taxed at your Prescribed Investor Rate (PIR) of 10.5 percent, 17.5 percent, or 28 percent while the money is invested. There is no required minimum drawdown rate in New Zealand, unlike some other countries, so you can choose your own pace.
What withdrawal rate is sustainable for NZ retirees?
A commonly cited guideline is the 4 percent rule, developed from US market data, which suggests withdrawing 4 percent of your starting balance per year gives roughly a 30-year survival probability in a diversified portfolio. In a New Zealand context, returns after inflation have historically been in the 3 to 4 percent range for a balanced fund, so a drawdown rate at or below your expected real return will broadly preserve the capital indefinitely. Because NZ Super covers a base level of income, many retirees find they need a lower drawdown rate from savings than the 4 percent guideline, which can meaningfully extend how long the balance lasts.