How do I manage my KiwiSaver?

2min read
Posted 23 July 21

Did you know that putting $10 into your KiwiSaver each week today could result in thousands in your account by the time you retire? If you're wondering just how much that comes to overall, try jumping on any free KiwiSaver calculator online to see how saving a little now could make a big difference in the long run. Most banks will have online calculators, or you can always find a generic one online.

In this blog, we'll cover what KiwiSaver is, why it matters and how you can get free money from the government to help with that home or retirement plan.
 

So, what's my KiwiSaver?

KiwiSaver is a voluntary scheme set up by the NZ government to help you not be homeless when you retire. There are many different funds to choose from, and you get to pick which one you want. 
 

How do KiwiSaver contributions work?

When you start a new job, you'll have the option of contributing 3, 4, 6, 8 or 10% of your pay to your KiwiSaver. Your employer should set it up to donate automatically, which means you won't have to worry about moving the money around yourself. 

The best part is that if you're contributing to your KiwiSaver, your employer's required to contribute as well. They have to put in a minimum of 3% of your salary but can add more in if they want.

You also aren't limited to just putting money in each payday, either. If you've come into any additional funds, you can put it in your KiwiSaver and watch it grow over the years.

Are you self-employed or doing contract work? Try to make a regular habit of putting money into your KiwiSaver each week. Your future self will thank you for it.

 

Can I take my money out whenever I want?

Not exactly there are some restrictions.

The whole point of KiwiSaver is for you to help you save up for one of two goals; retirement or purchasing a first home. You can only withdraw your cash once you hit 65, plan to buy your first home, or if you're suffering significant financial hardship. 

 

Am I eligible for KiwiSaver?

If you're an NZ citizen or a permanent resident who usually lives in NZ, the answer is yes. If you're eligible and aged between 18 and 65, you'll be automatically enrolled on KiwiSaver when you start a new job.
 

What if I don't want to be in KiwiSaver?

You can opt out of KiwiSaver, but we don't recommend it. When money goes into your KiwiSaver, your money gets invested for you and you get all the returns. That means putting a thousand in your KiwiSaver when you're 25 could see you earn tens of thousands if you withdraw it at 65.

Plus, if you choose to have a fixed amount paid into your KiwiSaver each payday, you won't have to worry about remembering to save for retirement, making it easier to plan for your future.
 

Do I have to choose a provider?

The short answer is no. If you don't choose your KiwiSaver provider and your employer doesn't prefer, the IRD will pick a default one.

Remember that researching your KiwiSaver provider first could help your money go a long way. There are many providers, all with different fees for their service and other strategies they employ to get you returns on your investment. So taking the time to check out what's on offer could make a big difference to how much money you can save overall.

While you're considering all this, think about the type of funds available. There are five main types of KiwiSaver funds: defensive, Conservative, Balanced, growth, and Aggressive. Defensive funds are the lowest risk but offer lower returns, while Aggressive funds are high risk but high reward. 

The younger you are, the riskier a fund you can afford to join. That's because you'll be in the KiwiSaver for longer, which means you'll have more time to ride out your investment's highs and lows. 

 

Additional savings.

If you're between 18 and 64 and in a KiwiSaver scheme, the government will automatically contribute 50 cents for every dollar you put into KiwiSaver, up to a maximum of $521.43 a year.

Just make sure you put in at least $1,042.86 to your KiwiSaver before the 30th of June each year. If you can't afford to put in a total of $1,042.86, try to add whatever you can afford.

 

Increase your contributions.

Are you just putting the minimum 3% into your KiwiSaver? Boosting it to 10%, 8%, or even 4% of your salary can all make a significant difference to your savings. Play around with different contribution rates on a KiwiSaver calculator to see what you could achieve.

 

Make extra payments to your KiwiSaver.

If you find yourself with additional money at any point, try putting some of it into your KiwiSaver. You don't have only to contribute the automatic amount each month — you can send some money to your KiwiSaver like any other fund.
 

In short.

KiwiSaver is a voluntary government scheme that sets aside a little out of your savings each week, which you can put towards a house or retirement.

You can contribute 3, 4, 6, 8 or even 10% of what you earn from a provider of your choice. Best of all, your employer has to contribute at least 3% from their side as well, to help you out.

 

 

Disclaimer.

Info and tools on the Yonda website are used as a guide only and do not constitute financial advice. Use Yonda as a starting point and then seek professional advice.