Maximising your retirement savings with KiwiSaver

For many New Zealanders, KiwiSaver is a vital component of retirement planning. It's a scheme that not only helps in building a nest egg for the future but also offers benefits that can enhance your financial well-being in retirement.

This guide delves a little deeper into strategies for maximising KiwiSaver contributions. It also provides some insights and useful tools to help you make informed decisions for your future.

KiwiSaver, in a nutshell

KiwiSaver is a voluntary, work-based savings initiative, designed to encourage long-term saving for retirement. It involves contributions from your salary (the first 3% usually being matched by your employer) supplemented by annual government contributions.

Tailoring your contribution rate

A critical factor in KiwiSaver’s effectiveness is your chosen contribution rate. Options range from 3% to 10% of your gross salary. Adjusting this rate can significantly impact your retirement savings. For instance, increasing your contributions from 3% to 6% can make a vast difference to your savings at retirement.

When setting your contribution rate, it's essential to align it with your financial goals and retirement aspirations. If you aim to maintain a lifestyle similar to your current one post-retirement, higher contributions may be necessary. Conversely, if you have other substantial retirement plans or savings, you might opt for a lower rate.

Selecting an appropriate KiwiSaver Scheme

Choosing a provider: You do not have to stay with your employer’s chosen provider, or a default provider. You can choose which KiwiSaver Scheme provider to invest with.

All KiwiSaver Schemes have a Product Disclosure Statement which tells you:

• The specific rules, fees, terms and conditions of the scheme.
• How your money will be invested.
• Who is responsible for managing your money.
• Their approach to responsible investing (including their environmental and social considerations).

Selecting an appropriate KiwiSaver fund

Choosing the right fund is a crucial decision in KiwiSaver. Each fund type - from conservative to aggressive - offers different levels ofrisk and potential return.

It is vital that the fund you choose aligns with your investment needs, circumstances and appetite to accept risk.

Assistance from a financial adviser to ensure you select the appropriate fund for your personal circumstances and goals is highly recommended.

Life stages and circumstances will almost certainly change, and so should your retirement planning strategy. Regularly reviewing and adjusting your KiwiSaver settings is essential to ensure they align with your current situation and long-term goals.

Maximising government contributions

The government contribution, also known as the member tax credit, can add up to $521.43 annually to your KiwiSaver investment. To receive the full amount, ensure you contribute at least $1,042.86 each year. Learn more in our article “Don’t leave money on the table: your KiwiSaver government contribution”.

Even if you are self-employed or not regularly contributing through an employer, you can still join KiwiSaver and by making contributions benefit from the annual government contribution.

Tools and calculators

In today’s digital age, there are numerous free tools available to help with planning your retirement savings, each offering unique features to cater to different aspects of financial planning. One of these free tools is our handy retirement calculator designed to give you an idea of how much you’ll have when you retire and whether you’re on track to meet your retirement goals. Simply follow4 steps to see if you're on track for retirement.

Tools and calculators are, however, no substitute for seeking expert advice from a financial adviser. The benefits to be gained from what is often just a small investment of time are enormous.

Seeking expert advice

Navigating the various aspects of KiwiSaver can be complex. Seeking professional advice can provide clarity and help tailor a KiwiSaver investment strategy that aligns with your unique financial situation and retirement goals. A financial adviser can offer insights into different fund options, contribution strategies, and ways to maximise government contributions.

An NZBritannia financial adviser is here to help. Visit our website or call us on 0800 500 811 to speak with our experienced advisers.

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