It takes time for a tree to flourish and grow, which is why gardeners plan well in advance. The same goes for your KiwiSaver savings. Whether you’ve just turned 18, are about to turn 65 or are somewhere in between, retirement will come around quicker than you expect. It’s a good idea to start thinking about how you want to spend retirement – whether that’s going on holidays or spending time with family – and how much money you’ll need.
Whatever you choose to do, you’ll need to have money sorted (and you’ll probably need more than you think). KiwiSaver could be a big part of how you pay for the retirement you’re planning. Our KiwiSaver calculator can show you how long your savings might last you in retirement, and how your decisions now could affect your future balance.
There are three main factors that will determine how much you’ll have in your KiwiSaver account when you retire:
- The type of fund you invest in
- How much goes in
- How much you pay in fees.
Type of fund
It’s important to choose a fund that suits your needs and goals, and to review it whenever your circumstances change. The ASB KiwiSaver Scheme has five funds to suit different types of investors. Use our help me choose tool to see which fund may suit you best.
The most common way of contributing to KiwiSaver is through your salary/wages – your employer will automatically deduct a percentage from your pay. You can choose to contribute 3%, 4% or 8%. The great thing about this is that it’s invested for you before you even see the money.
You can also contribute directly to your KiwiSaver account – which is useful if you’re self-employed, not working or just want to top up your regular contributions.
Your employer’s contributions
If you're employed and making KiwiSaver contributions from your pay, your employer will contribute the equivalent of 3% of your pay to your KiwiSaver account if you meet the eligibility criteria.
Each year (1 July to 30 June) if you’re eligible, for every $1 you put in, the Government will contribute $0.50, up to $521.43 towards your KiwiSaver savings. To get the full amount, you’ll need to contribute $1,042.86 over the year; this works out to be around $20 a week.
You don’t have to contribute the maximum amount to benefit from this – even putting in an extra $10, could get you $5 from the Government.
You can see if you’re eligible here.
For six years in a row, Canstar has rated our ASB KiwiSaver Scheme Balanced Fund and Growth Fund five stars for 'outstanding value'. This year, the NZ Cash Fund also achieved this rating.
Fees are a significant part of this Canstar rating. Low fees means more of your money stays invested to earn returns.
To make the most of your KiwiSaver account, there are three areas you can focus on: increasing your contributions, choosing the right fund and making sure you’re not paying too much in fees.