10 Years of KiwiSaver: Thinking about your retirement, even if it’s close

Even if you’re close to retiring, it’s still important to understand how KiwiSaver can help you have a better retirement, and how some simple choices that you make now can make a big difference for your future.

The first choice you have is to join KiwiSaver, and it’s probably the most important one. Even if you originally opted out, there’s nothing stopping you from signing back up. You can join directly with a KiwiSaver provider by completing an application form or by talking to your employer. You can find more information about joining the ASB KiwiSaver Scheme.

As we have universal superannuation in New Zealand which isn’t means tested, KiwiSaver is there to complement this, and add to your quality of life in retirement. The more you put in, the more you can potentially grow to help you have the retirement you want.

Once you’re signed up, the next step is to make sure you’re in the right fund and at the right contribution level for your goals. When thinking about retirement, both of these choices can have a big impact on how much you’ll have when you reach retirement age, and what your lifestyle might be like.

In our recent Facebook Live Q&A, ASB’s Head of KiwiSaver, Aidan Vince, gave the example of a 30 year old earning $50,000 a year with $20,000 in their ASB KiwiSaver Scheme account today and investing in the growth fund. They could save an extra $33,359 for their retirement just by switching their contribution rate from 3% to 4% of their before-tax pay, an extra cost of around $10 per week.*

When thinking about fund selection, the timeframe you’re investing for is an important consideration. If you’re closer to retirement, it might be a good idea to have a more conservative approach to your fund choice as you need to start protecting the value of your investment against potentially bigger ups and downs that a higher risk fund produces.

You can use our online KiwiSaver Calculator to see how much you might have when you reach 65, and how your choice in fund or contribution rate might affect this.

You can also make voluntary contributions which can really add up in the long term.

While you can access your funds when you reach retirement age, it doesn’t mean you have to! If you continue working, you can still contribute and continue to potentially grow your balance until you’re ready to start withdrawing. If you do retire, there may be no need to withdraw everything – so you can keep your money away from temptation until you do need it.

If you’re reaching retirement age and would like to make a withdrawal, you’ll need to contact your provider.

ASB Executive Wealth Manager, Rebecca Drummond explains:

“The difference with KiwiSaver to some historical superannuation funds is that it’s your money, and it’s held in a trust account in your name with the provider’s supervisor. This means if a KiwiSaver provider’s business were to fall over, your investments wouldn’t be affected. You contribute, as well as your employer and the Government and it’s your savings, to help you into a first home or to assist you with a better quality of life in retirement.”

While the Government may make small changes along the way, as it has in the past by removing the $1,000 kick-start, and raising the minimum contribution level, it’s in the country’s best interests for everyone to be saving more for their own retirement.

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