Four tips to secure the retirement lifestyle you want: Could your KiwiSaver account help you get there?
01 February 2025 / Published in Your MoneyFour tips to secure the retirement lifestyle you want: Could your KiwiSaver account help you get there?
Many of us have ideas about how we’ll spend our time in retirement, but not many of us have a clear plan on how we’ll get there*. Calculating how much you’ll need, how to save or invest, and committing to a savings plan can feel like a big job. In this blog, we’ll share simple tips and tools you can use to get you on track to secure your future.
Why KiwiSaver is a great way to save for your future
KiwiSaver is a voluntary, work-based savings initiative designed to help New Zealanders save for their retirement. Here’s how it works:
1. Fund choice: If you're signing up for KiwiSaver with a provider, you'll generally need to pick a fund for your money to be invested in. If you've been auto enrolled by your employer, it's likely you'll be placed in a default fund, which may or may not be best suited to your situation.
What makes funds different is the mix of assets they invest in. There are two main types of assets:
- ‘Income assets’ – which include bank deposits and bonds issued by Governments and companies. Lower risk funds usually have a high proportion of income assets.
- ‘Growth assets’ – which include equities (shares in companies) and listed property (shares in companies who are involved in property investment and development). They sometimes have very high returns, and at other times might not grow at all, or even drop in value. Higher risk funds typically have a high proportion of growth assets.
Tools like our ASB KiwiSaver calculator and advice tool can help you find the best ASB KiwiSaver Scheme fund for you.
If you are a member of the ASB KiwiSaver Scheme you can change your fund online using the ASB Mobile Banking app or FastNet Classic, ASB’s internet banking service.
2. Employer and employee contributions: If you’re employed and contributing 3% of your gross salary or wages to KiwiSaver, your employer must also contribute 3% to your KiwiSaver savings**. Remember, 3% is the minimum contribution rate - you can choose to contribute more. Also check with your employer if they match higher contribution rates, as some do.
3. Government contributions: If eligible, the Government contributes 50 cents for every dollar you put into your KiwiSaver account, up to a maximum of $521.43 each year. This 'free money' can boost your retirement savings.
4. Voluntary contributions: Voluntary contributions can be a great way to save a little more each week or month, or if you have a lump sum to invest. If you’re not contributing a percentage of your wages or salary to KiwiSaver, voluntary contributions are also a great way to make sure you qualify to receive $521.43 from the Government in your KiwiSaver account each year.
5. Investment growth: Over time, the investments your money is in can grow, helping you build a nest egg for your future.
How much money do I need to save for retirement?
Life after you stop working generally means life without a regular pay check from your employer. For many of us that can bring on a feeling of insecurity. But the good news is, putting a simple plan in place before you retire to secure your future can be quite simple if you have a KiwiSaver account. Here are four questions to ask yourself.
1. Understand your financial position today
What assets do you own and how much are they worth? You may own your home, have retirement savings or investments like KiwiSaver. What are you spending your money on; regular bills and lifestyle ‘extras’?
2. Think about the lifestyle you want in retirement
Would you like a better lifestyle in retirement than you are living right now, a lesser lifestyle in retirement than you're living right now, or the exact same lifestyle in retirement as you are living right now?
3. Will your retirement savings and investments be enough?
Many of us would like to live a retirement lifestyle that can’t be supported by NZ Superannuation alone. So, we need to make up the difference from our own retirement savings and investments or downsize our home. In 2024, a couple who both qualify for NZ Superannuation will receive $761.48 after tax each week***. If their weekly expenses and lifestyle ‘extras’ total $1,000 they’ll need to find $238 each week to maintain their current lifestyle.
4. Seek guidance or professional advice
Online calculators, like our ASB KiwiSaver calculator and advice tool or the Sorted retirement calculator, can help you check whether the amount you’re currently saving or investing each week will add up to enough to fund the lifestyle you want in the future. If you’re not on track, saving a few dollars extra each week, fortnight or month can make a difference. With ASB, it’s easy to set up a regular automated transfer from your bank account to your ASB KiwiSaver Scheme account or an ASB Investment Funds account. ASB Investment Funds are managed funds that have the potential to provide better long-term returns than traditional savings accounts and term investments. They work in the same way as a KiwiSaver investment does, but unlike KiwiSaver, you can access your money before 65 if you need to.
If you’re unsure whether you’re on track or would like some more help, you could get in touch with a financial advisor. They can help you develop a personalised retirement plan and ensure that you’re making the most of your KiwiSaver contributions. A 15-minute check-in with one of our KiwiSaver Specialists at ASB might be a great place to start. If you’ve recently sold a business or property, received an inheritance or have significant savings you’d like to grow, booking an Appointment with one of our ASB Wealth Managers might be an option for you.
An example - Meet Mike and Kim****
Mike and Kim are both 45 and are planning to retire when they’re 65. They’re looking forward to travelling a couple of times a year and spending more time on their hobbies during the week when they’ve stopped working.
Mike and Kim’s KiwiSaver account balances are both $80k each. They both earn $90k a year and are contributing 3% to their ASB KiwiSaver Scheme account, investing in a Growth Fund.
Mike and Kim have worked out that they need about $1,300 a week to cover bills and continue to live the lifestyle they currently enjoy after they’ve retired.
After they turn 65, they’ll both qualify for NZ Superannuation and receive a combined $761 after tax (‘S’ tax code) each week***. That means they’ll need to find about $540 each week to maintain their current lifestyle.
By contributing 3% of their income to KiwiSaver each pay check (and their employer matching their contributions), they’re on track to have $434 a week income from their KiwiSaver accounts from retirement at 65 until they’re 90 years old. This would still leave them a shortfall of $105 each week.
Mike and Kim would prefer not to downsize their home, so will need to make a change to their savings strategy to get on track.
After reviewing their weekly budget and playing around with their fund choice and contributions in our ASB KiwiSaver calculator, they decide they can each afford to transfer $50 a week to each of their KiwiSaver accounts, on top of the amount they’re putting in from their pay checks each month. Mike and Kim see from the calculator that this puts them on track to have $556 a week combined income from their KiwiSaver savings.
Receiving $761 NZ Superannuation each week plus the $556 from their KiwiSaver savings, Mike and Kim are now on track to have a combined ‘pay check’ of $1,317 each week to enjoy the retirement lifestyle they’re planning.
What's next?
#1. Check you’re in the right KiwiSaver fund
Did you know that you can get free advice on which ASB KiwiSaver Scheme fund is right for you in the ASB Mobile Banking app or FastNet Classic internet banking by giving our KiwiSaver calculator and advice tool a go? If you prefer to speak with a KiwiSaver specialist, visit us in branch or give us a call on 0800 272 738.
#2. Set up an auto-transfer to your ASB KiwiSaver Scheme account or ASB Investment Funds account
Investing a small amount, regularly can make a big difference to your future. If you’ve got a few dollars extra in your budget, you could set up a regular transfer from your ASB bank account to your ASB KiwiSaver Scheme or ASB Investment Funds account.
Here’s how:
1. Log in to the ASB Mobile Banking app or FastNet Classic internet banking.
2. Select the account you’d like to transfer from and your ASB KiwiSaver Scheme or Investment Funds account you’d like to transfer into.
3. Enter the amount you’d like to transfer each week, fortnight, or month and the date you’d like the first transfer to be made to set up a contribution schedule.
You can make changes to or cancel your transfer schedule at any time.
Remember, it’s never too early or too late to start planning for your retirement. Take advantage of the tools and resources available to you and make your KiwiSaver account work for you.
*Financial Capability Barometer 2018-2019, Commission for Financial Capability https://assets.retirement.govt.nz/public/Uploads/Research/CFFC-Barometer-Report-2018-2019.pdf
** If you’re employed and contributing 3% of your gross salary or wages to KiwiSaver, your employer must also contribute 3% to your KiwiSaver savings, unless they are already contributing to another superannuation fund for you.
***How much you can get for NZ Super, https://www.workandincome.govt.nz/eligibility/seniors/superannuation/how-much-you-can-get.html
**** The figures used in this case study are for illustration only and may not reflect actual returns. The underlying return, tax and inflation assumptions are set by the Government. The calculations have been made using the ASB KiwiSaver calculator on the 18th November 2024.
For this case study, we've assumed that:
- Mike & Kim were born on 1 Nov 1979
- Each has an annual gross salary of $90,000
- Existing KiwiSaver members with $80,000 invested each
- Are invested in the ASB KiwiSaver Scheme Growth Fund, with the assumption added that they will follow ASB's glide path (reduce risk as they approach retirement) for fund changes
- Set up a voluntary regular contribution of $50 (per week) from November 2024
- Savings goal is for retirement (retirement age is 65 years old)
- The figures in this case study are shown in today's dollars
- Visit the ASB KiwiSaver Scheme Calculator which will provide further detail about these assumptions.
Interests in the 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 administration and distribution services for the Schemes. 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. Fees may change. For more information see the ASB KiwiSaver Scheme Product Disclosure Statement or the ASB Investment Funds Product Disclosure Statement available from this website and the register of offers of financial products at www.disclose-register.companiesoffice.govt.nz (search for ASB).