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10 Years of KiwiSaver: Saving for your first home

18 July 2017 / Published in Your Money
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As KiwiSaver turns 10 years old, we’re taking some time to help Kiwis understand how choices made today, can make a big difference to the future.

We know that Kiwis need all the help they can get to save for their first home and KiwiSaver is a great way to do this. As a KiwiSaver member, after three years of contributing you can withdraw everything, including any employer and government contributions to go towards purchasing your first home, as long as you leave behind $1,000 plus any amounts transferred from an Australian complying superannuation fund.

While the money in your KiwiSaver account is yours, it’s stored away and only accessible in limited circumstances, such as for your first home purchase or when you become eligible for retirement withdrawals. Having your savings away from temptation is a great way to keep your goal on track, as you’re unable to dip into these from time to time. Also, being able to use any extra contributions from your employer and the government will go a long way towards helping you get into your first home.

The two main things to think about when you’re looking to use your KiwiSaver savings to buy your first home are fund selection and contribution amount. We have a handy online KiwiSaver Calculator that can work out how much you could have when you’re ready to buy. You might be surprised at how much extra that could be just by changing your contributions.

Fund Selection

Your fund selection will depend on your investment timeframe, and it’s important to choose a fund that reflects this as well as your savings goal. For example, while the growth fund might perform better in the long term and be suitable to those that have more than 16 years before needing to access their investment, having the lower risk associated with a conservative fund may be more beneficial if you’re looking at using your KiwiSaver savings within the next two or three years.

Use our online Help Me Choose tool to see which fund we recommend.

Contribution amount

The amount you contribute to KiwiSaver should be determined largely on what you can afford. Changing your contribution amount can make a big difference in the balance you can grow towards your first home and it’s useful to check our online KiwiSaver Calculator to see how much this can affect your potential balance.

For example, using our KiwiSaver calculator, if you’re 28 years old, earning $60,000 a year, just starting out with KiwiSaver and looking to make a first home withdrawal in 2020. Your first home withdrawal could go from approximately $9,770 to $18,891 if you change your contribution rate from 3% - 8%. This works out to be about $58 extra per week that you’d be contributing to your KiwiSaver account and can make a significant difference to your balance in this short timeframe.*

Making extra contributions is also a great way to grow your balance, and save for your goal. If you’re employed and contributing from your pay, just let your payroll know in writing that you’d like to change your rate. Your options are currently 3%, 4% or 8% of your before-tax pay.

If you’re contributing directly to the ASB KiwiSaver Scheme by direct debit you can contact us to change the amount or you can change this via FastNet Classic if it’s an automatic payment. It’s great to know that this money is away from temptation.

Accessing your KiwiSaver savings for your first home

Make sure you allow some time to let your provider know you are going to do this, rather than on the day you settle. It takes around ten working days to process a KiwiSaver first home withdrawal application, so talk to us early and we can hopefully help you out.

You can email us at retire@asb.co.nz

Look out for more in our 10 Years of KiwiSaver blog series.

The content discussed here is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial advice. As individual circumstances differ, you should seek appropriate professional advice.

Interests in the ASB KiwiSaver Scheme (Scheme) are issued by ASB Group Investments Limited, a wholly owned subsidiary of ASB Bank Limited (ASB). ASB provides Scheme administration and distribution services. No person guarantees interests in the Scheme. Interests in the Scheme are not deposits or other liabilities of ASB. They are subject to investment risk, including possible loss of income and principal invested. For more information see the ASB KiwiSaver Scheme Product Disclosure Statement available from ASB’s website and the register of offers of financial products at www.business.govt.nz/disclose (search for ASB KiwiSaver Scheme).

*Amounts are based on calculations performed by the KiwiSaver calculator on 11 July 2017 and investing in the Scheme’s conservative fund. Assumptions for these results can be found at asb.co.nz/kiwisaver-calculator

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