Inflation-Adjusted Retirement Income Calculator

How this calculator works

Every dollar figure in personal finance is either nominal or real. A nominal amount is the actual number of dollars at a point in time, with no adjustment for prices. A real amount, sometimes called "today's dollars", adjusts a nominal figure so it can be fairly compared with prices as they stand now. The relationship is the standard discounting formula: today's-dollars value equals the future nominal amount divided by (1 plus the assumed annual inflation rate) raised to the power of the number of years. Run it in reverse, multiplying instead of dividing, and you get the future nominal amount needed to match a today's-dollars target. This calculator does both, depending on the direction you select, and the further away the date and the higher the assumed rate, the larger the gap grows between a nominal figure and its real equivalent.

Why retirement projections are shown in nominal dollars

KiwiSaver providers and retirement projection tools almost always show a forecast balance or income in nominal, future dollars, because that is the actual cash the account is projected to hold, built from contributions and compounding returns. What it is not designed to do is tell you how much that future amount will actually buy, because nobody can know the exact rate of future inflation. Separating "how many dollars will I have" from "what will those dollars be worth" is the job of this calculator.

What inflation rate should you use

The default assumption here is 2% a year, the midpoint of the Reserve Bank of New Zealand's 1% to 3% inflation target, measured against the Stats NZ Consumers Price Index (CPI). It is a sensible long-run planning figure because it is the level the Reserve Bank manages monetary policy towards, but it is not a guarantee of what inflation will do in any given year. New Zealand's annual CPI inflation has ranged from around 1% to 2% in the early 2020s, to above 7% in 2022 during the post-pandemic supply shock, and was measured at 3.1% in the December 2025 quarter. Because a single assumed rate can understate or overstate the true erosion of purchasing power over a long horizon, this calculator shows your result at 1%, 2% and 3% inflation side by side.

Worked examples

Say a KiwiSaver projection tool tells you that you are on track for a retirement income of $80,000 a year in 25 years' time. That is a nominal figure. At the default 2% inflation assumption, $80,000 divided by 1.02 raised to the power of 25 comes to about $48,762 in today's purchasing power, meaning that future $80,000 buys roughly what $48,762 buys today. Test the sensitivity: at a more optimistic 1% inflation the same $80,000 is worth about $62,381 today, and at a higher 3% inflation it is worth only about $38,208. That is a wide range for the same nominal headline figure, and exactly why relying on the nominal number alone can mislead.

Now take the reverse direction. Suppose you want a retirement lifestyle equivalent to $65,000 a year at today's prices, 20 years away. At 2% assumed inflation, $65,000 multiplied by 1.02 raised to the power of 20 comes to about $96,587, the nominal income you would need to receive in 20 years' time to enjoy today's $65,000 purchasing power. If your savings are only projected to produce a nominal $80,000 by then, comparing it against this $96,587 target, rather than against the original $65,000, is the fair like-for-like comparison.

What this calculator assumes

• A single, constant annual inflation rate applied over the whole period. Real-world inflation varies year to year, so this is a simplifying planning assumption, not a forecast.
• The default 2% rate is the midpoint of the Reserve Bank's current inflation target band, not a promise about future CPI.
• Adjusts for the erosion of purchasing power only. It does not model investment returns, fees, or tax.
• Figures are pre-tax planning estimates, rounded for display.

Who this calculator is for

This is for anyone given a future dollar figure, a KiwiSaver projection, or a retirement income estimate, who wants to know what it is genuinely worth compared with prices today. It is equally useful in reverse for setting a fair savings target: if you know the income you want at today's cost of living, this calculator shows the larger nominal figure your savings actually need to produce. It pairs naturally with our Retirement Number Calculator and our KiwiSaver Retirement Projection Calculator.

Frequently Asked Questions about inflation-adjusted retirement income

What does "inflation-adjusted" mean for a retirement income figure?

It means the figure has been converted from nominal (future) dollars into today's purchasing power, so you can see what it would actually buy compared with prices now, rather than being misled by a headline number that has not been adjusted for rising prices.

Why is my KiwiSaver or retirement projection shown in nominal dollars rather than today's dollars?

Because that is the actual cash your account will hold in future. Providers project contributions and growth forward in future dollars and leave it to you to separately adjust for inflation.

What inflation rate should I use for a long retirement projection?

The default is 2%, the midpoint of the Reserve Bank's 1% to 3% inflation target. Actual CPI inflation was 3.1% in the December 2025 quarter, so it is worth testing a range, which is why the results panel shows the answer at 1%, 2% and 3% side by side.

How do I convert a future nominal retirement income into today's dollars?

Divide the future nominal amount by (1 plus the assumed annual inflation rate) raised to the power of the number of years between now and then, or let this calculator do it in the future-to-today's-dollars direction.

How do I convert a today's-dollars income target into the nominal figure I will need in the future?

Multiply the today's-dollars target by (1 plus the assumed annual inflation rate) raised to the power of the number of years, or select the today's-target-to-future-amount direction above.

Is New Zealand's inflation rate guaranteed to be 2%?

No. Two percent is the midpoint of the Reserve Bank's target range, not a guarantee. Inflation has ranged from close to 1% in the early 2020s to over 7% in 2022, so treat any single assumed rate as a planning estimate and test more than one.

Should I use CPI or wage inflation for this kind of adjustment?

CPI measures the general rise in prices and is the right measure for what an income will actually buy. Wage inflation, which tends to run a little higher over time, is more relevant if you are comparing your future income to future wages generally, a different question to this one.

How is this different from the Retirement Number Calculator?

The Retirement Number Calculator works entirely in today's dollars to size the nest egg you need on top of NZ Super. This calculator instead takes a nominal, future-dollar figure and translates it into today's purchasing power, or the reverse, so the two are complementary steps in the same planning process.

Related calculators

• Retirement Number Calculator: works out the nest egg you need in today's dollars, on top of NZ Super.
• KiwiSaver Retirement Projection Calculator: projects your current balance and contributions forward to a nominal future balance.
• Retirement: How Long Will My Money Last Calculator: how many years an actual pot lasts at a chosen drawdown.
• NZ Super Rate Calculator: current fortnightly, weekly and annual NZ Super rates for your living situation.
• NZ Super plus KiwiSaver Combined Income: total likely retirement income from both sources together.
• Inflation Adjusted Thinking: background on this topic.

Official NZ sources

This calculator is built from primary New Zealand sources. Always confirm current figures against the official source for your situation:

• Reserve Bank of New Zealand: the 1% to 3% inflation target and how monetary policy manages it
• Stats NZ: the Consumers Price Index (CPI) and current inflation data
• Sorted (Te Ara Ahunga Ora, Retirement Commission): KiwiSaver fund comparison and retirement planning tools