Your long-term savings goal can be as simple as one number, so what’s yours?

17 August 2022 / Published in Your Money

KiwiSaver can be a great way to save toward a deposit for your first home or for your retirement. But those can be big, far away goals. Sometimes they can be so big they feel unreachable, like the top of a mountain. 

But like climbing a mountain, reaching your savings goal starts with one step – and a little planning.

With a clear goal and a simple plan, you’re set. Your goal feels much more achievable, and impacts like market volatility can become less of a concern.

Why saving is more important than ever

ASB’s Head of KiwiSaver Distribution, Hamish Davidson, says: “Lots of Kiwis think of a mortgage-free family home as their retirement plan. In the past, being debt-free and collecting the NZ Super may have given people a decent standard of living. But inflation means those same people may need some tangible retirement savings, to enjoy a comfortable retirement”.

The thirst for investment knowledge is growing and people are asking what else they could be doing to set themselves up for financial freedom, to live the lifestyle they deserve in retirement. 

KiwiSaver has lots of benefits, like employer and government contributions in addition to your own savings. It’s one of the best long-term savings options out there. ASB Investment Funds also works well alongside KiwiSaver – and with the recent changes to our Investment Funds (no minimum deposit), we’ve made it even easier for you to set yourself up for financial success.

The simplest goal: how much do you need?

The good news is that you probably have some savings in your KiwiSaver account, so you’re not starting from the bottom of your mountain. The best preparation is to work out exactly how much you need, and by when. 

For example, if you and your partner are both saving for your first home, you might have a shared goal: “We’re going to save $75,000 between us over the next two years.” Or you might decide “I want to retire at 65 with $950,000”. 

Your KiwiSaver balance will generally grow much faster than your contributions - boosted by way of your KiwiSaver triple jetpack: your employer/Government contributions (if eligible), and the returns on your investments, over time. All of them speed up your savings progress.

So, how do you work out your simple number?

How to work out your target number

To enjoy a comfortable retirement, Hamish says “We all need to keep adding to our KiwiSaver balances over time. Choosing how much to save comes down to knowing your target.” It’s also important to keep contributing to your KiwiSaver account, even if you’ve used your balance for a first home deposit. 

Massey University’s New Zealand Financial Education Centre[1] has done the hard work, they’ve estimated the likely weekly living costs for single people and couples. They provide the costs for a simple life (no frills) or one with a few extras (choices), in either a main city or in the provinces.

It shows that NZ Super alone won’t be enough, so your savings are going to have to step in to fill the gap. They’ve also spelt out what lump sum you’ll need to have, and how much that will provide each week. 

Take a look at these tables – a summary of their findings – to see what your target could be.

We’re here to help

Knowing how much you need to save is a very simple way to set your savings goals.

No matter if you are just starting to save for retirement or need to check whether you are on track. Good advice and guidance from our qualified financial advisors helps you better understand your financial situation, and make sure you’re doing everything you can to maximise your savings balance when you retire.

Our advice is free, and a 15-minute conversation can make a huge difference to your savings and your peace of mind - see how we can help here. Our advisors are available from 8am to 8pm during the week, or 8:30 to 5pm on Saturdays, on 0800 272 738

Our ASB KiwiSaver Scheme Calculator can help as well, showing your likely balance at retirement based on your income, your choice of fund, your current balance and your contribution rate. You can also visualise how your outcome (estimated balance) changes as you change your choice of fund, contribution rate etc.

Be sure to check out our blog on how the right advice can help you save more.

Interests in ASB KiwiSaver Scheme and ASB Investment Funds (Schemes) are issued by ASB Group Investments Limited, a wholly owned subsidiary of ASB Bank Limited (ASB). ASB provides Schemes administration and distribution services. No person guarantees interests in the Schemes. Interests in the Schemes 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 and ASB Investment Funds Product Disclosure Statements available from ASB’s website and the register of offers of financial products at www.business.govt.nz/disclose (search for ASB KiwiSaver Scheme or ASB Investment Funds).

[1] Massey University - New Zealand Retirement Expenditure Guidelines


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