The retirement number that actually matters.

When you use a retirement calculator, it will typically show you a lump sum — the amount you need to have saved by retirement. That number is the centrepiece of the calculation. It is what people remember, talk about, and plan around. As covered in how much you actually need to retire, the way that number is expressed matters enormously.

The question worth asking is: which dollars is that number in?

It is not a trivial question. The answer changes the number significantly — and, more importantly, it changes whether the number is genuinely useful to you.

Two kinds of dollars

There are two ways to express a future sum of money.

The first is in constant dollars — today's purchasing power. A constant dollar figure tells you what the sum would be worth in today's terms, stripping out the effect of inflation between now and retirement. If you need $375,000 in constant dollars, that means you need an amount whose purchasing power is equivalent to $375,000 today.

The second is in current dollars — sometimes called nominal dollars — which is the actual figure that will need to be in your account at retirement. This is the real number: what your KiwiSaver balance and other savings will literally need to add up to on the day you retire. Because of inflation between now and then, this figure is considerably higher than the constant dollar equivalent.

Most retirement calculators show the constant dollar figure. It is a smaller, less confronting number. And for someone planning retirement twenty years away, it can be quietly, significantly misleading.

Why the constant dollar figure is dangerous

Here is the problem. If a calculator tells you that you need $375,000 to retire — expressed in today's dollars — and you take that at face value, you might plan to accumulate $375,000 in your KiwiSaver account. But $375,000 in twenty years' time, at even modest inflation, will buy considerably less than $375,000 buys today. It is not the figure you need in your account. It is a theoretical representation of what that figure is worth in today's terms.

The actual account balance you need could be substantially higher — potentially more than double, depending on the inflation rate assumed and the number of years until retirement. Someone who retires thinking they have hit their target, based on a constant dollar figure shown by a calculator, may find that the real purchasing power of that balance is considerably less than they planned for.

This is not a hypothetical concern. It is a genuine and common planning error, made easier by tools that prioritise reassuring numbers over accurate ones.

How ThatDay approaches this differently

ThatDay asks users to express their desired retirement spending in today's dollars — which is the only way most people can give a meaningful answer. Asking someone what they want to spend in retirement twenty years from now, expressed in 2046 dollars, is asking them to guess a figure they have no frame of reference for. Asking them what a comfortable retirement lifestyle costs in today's money is a question they can actually answer.

As shown in why your retirement probably costs less than you think, ThatDay's stepped spending model also means the target itself is more accurate than most calculators assume.

From that starting point, ThatDay then does something most other platforms don't: it shows you the lump sum you need expressed in actual, nominal dollars — the real figure that needs to be in your account at retirement, with inflation already accounted for. Not a theoretical today's-money equivalent. The number on the screen is the number you are working toward.

This matters because it keeps the goal honest. The monthly or weekly savings figure ThatDay shows you — the amount you need to put away regularly to reach your retirement target — is calibrated to get you to the real number, not a theoretical one. Everything in ThatDay's results is designed so that what you see is what you actually need.

What this looks like in practice

A concrete example makes this clear. A couple using ThatDay might tell the platform they want $80,000 a year to live on in retirement — a figure they can relate to because it is expressed in today's dollars. Twenty years from now, with inflation factored in, that same lifestyle will actually cost around $119,000 a year. That is the figure ThatDay shows in its retirement spending projections — not $80,000, which would be a comfortable fiction.

The same logic applies to NZ Super. Today a couple receives $44,412 per year combined in NZ Super after tax. By 2046, because Super rises with wages and inflation, that same entitlement will be paying out considerably more per year in nominal terms — as the ThatDay projection shows, close to $66,000. ThatDay accounts for this too — showing the actual Super contribution to retirement income in each future year, not a static today's-money figure.

The result is a retirement picture where every number is real. The spending figure is what you will actually need. The Super contribution is what you will actually receive. And the gap between them — the amount your savings need to cover — is the actual gap, not a theoretical one stripped of the inflation that will be very much present in your retirement years.

Honest numbers are more useful than comfortable ones

There is a temptation, in financial planning tools, to present numbers in the way that feels least alarming. Constant dollar figures are smaller and easier to absorb. They create less friction in the moment.

But friction in the moment is often exactly what good planning requires. A target that accurately reflects what you need to accumulate — even if it is larger than a constant dollar figure would suggest — is a target you can actually work toward with confidence. A target that understates the real requirement may feel manageable until the moment it becomes clear it isn't.

ThatDay's approach reflects a broader belief that runs through everything the platform does: that people are better served by honest clarity than by comfortable approximations. That the goal of retirement planning is not to make the numbers feel smaller, but to give people an accurate picture of their situation so they can make real decisions with real information.

What this means for your planning

The practical implication is straightforward. When ThatDay shows you a lump sum, that figure is the actual balance your savings need to reach — not a today's-money equivalent that will require mental adjustment. You can take that number at face value and plan against it directly.

It also means that the savings rate ThatDay recommends — the regular contribution needed to bridge the gap between where you are and where you need to be — is a realistic figure, calibrated to the real target rather than a theoretical one. What ThatDay tells you to save is what you actually need to save.

See your real number

ThatDay is a free retirement planning platform built for New Zealanders. It shows you your retirement picture clearly and honestly — in numbers that reflect what you will actually need, not numbers adjusted to be easier to look at.

Its financial assumptions were independently validated by the University of Auckland Business School's Master of Applied Finance programme.

Further reading: Why your retirement plan needs to be dynamic

See your real retirement number — start your free plan at thatday.co.nz