When you’re stuck in the grind of day-to-day life, it can be hard to take a step back and think about the future – including your KiwiSaver money. Here's a quick checklist to keep your KiwiSaver progress top of mind.
What KiwiSaver provider and fund are you with?
Many people don’t pay a lot of attention to their KiwiSaver accounts – they just tick over in the background. But it's important to know which provider you are with and what sort of fund your savings are invested in. If you’ve not made an active choice, it’s likely you’ll still be in a default fund. Which leads us to your next step…
Is the fund right?
When you’re young (or even young-ish), or you have a long time until you need your money, you may be able to afford to take a bit more risk with your investments and get a better return as a result. That usually means investing in more growth assets, such as shares. For example, depending on your attitude to risk, an “aggressive” or “growth” KiwiSaver fund may be appropriate for you.
Later in life, your strategy might change, but just because you're past the middle-point of your working life, it doesn't mean you should necessarily take a conservative approach. To make the most of compound interest, it's important not to move out of growth assets too early. Even if you are nearing retirement, you may want to have some allocation to growth to give your funds a better chance of keeping up with inflation.
Of course, your choice depends on your circumstances, so keep us in mind. We can help you make an informed decision that is right for you and your future.
Think about your goals
Is KiwiSaver likely to be your only retirement investment strategy, or have you got other things ticking over that will give you some money? How will they all work together? By getting a clear idea of the different pillars of your retirement plan, you can also get a better sense of how much you're likely to save.
Are you contributing enough?
It’s easy to assume that because the minimum KiwiSaver contribution is 3 per cent of your salary a year, if you’re meeting that target, you’re on track for a luxurious retirement. But you’re probably going to need to chip in a bit more, or have assets outside KiwiSaver, if you want to be able to have the freedom to have a few luxuries in retirement.
Massey University estimates that two-person households in big cities need an extra $800 on top of the pension for a “choices” lifestyle – and that requires a lump sum of almost $800,000. Using a KiwiSaver calculator can be a good way to start, but keep in mind that results may differ widely across calculators due to the assumptions they make. Once again, please don't hesitate to contact us to get a clearer picture of your progress.
Are you paying the right tax rate?
Recently, many New Zealanders have been found to not have been paying the right amount of tax on their KiwiSaver accounts. In some cases, they’ve been assigned the top tax rate when they should have been on much less. Check whether your PIR rate lines up with what you should be paying so you can keep as much of your money in your account as possible.
Looking to change provider?
Depending on your situation and what you value, you may want to look at other KiwiSaver providers. While they all offer broadly the same thing, there are nuanced differences. Whether you're after responsible investment or lower fees, we can help you find out that’s a great fit.
We are here for your future
We’d love to help you make sure you’re on the path to a happy, enjoyable retirement. Please get in touch today to get your plans underway.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.