Will you have enough money for Retirement?
Have you started saving for retirement yet with Kiwisaver? If so, when did you start? If not, when do you intend to start? Have you worked out how much you’re going to need?
If you are relying on the government superannuation to retire on then take a look at what you would potentially be living on:
|NZ Superannuation or Veteran’s Pension — standard rates||Net weekly rate
(after tax at “M”)
|Net weekly rate
(after tax at “S”)
|Single, living alone||$384.76||$365.91|
|Married, civil union, or de facto couple, both qualify (total)||$591.94||$554.24|
|Married, civil union, or de facto couple, with non‑qualified spouse included (total)||$562.60||$524.90|
Could you manage on $384.76 per week on your own, or as a couple is $591.95 enough for you both? One has to say, there’s not much left to enjoy life after you’ve paid all the bills and spent it on living costs.
KiwiSaver is a savings investment option that can help set you up for retirement. Research shows many of us don’t fully understand KiwiSaver (Take the quiz). Let me help demystify it for you.
What is KiwiSaver?
KiwiSaver is a voluntary savings plan to help you save money for your retirement. Your KiwiSaver is made up of contributions from you, your employer (if employed), annual member tax credits from the government and investment returns.
- A 3% contribution from your employer. If you’re contributing to KiwiSaver from your salary or wages, your employer is required to put in a minimum of 3% of your Before Tax Pay (less employer’s superannuation contribution tax).
- Member Tax Credits of up to $521.43 every year. For every $1 you put in to your KiwiSaver scheme account, the Government will put in 50 cents up to a maximum of $521.43 per year, if you’re 18 or over. This is called a Member Tax Credit.
- First home withdrawal. If you’ve never owned a home, and you’ve been a KiwiSaver member for at least three years, you can take out all of the money both you and your employer have put in, as well as all of the investment returns, to help buy your first home.**
- Up to $10,000 HomeStart grant. On top of the first home withdrawal, if you’re eligible, you may also receive up to $10,000 as a HomeStart grant from the Government towards your first home.**
How KiwiSaver works?
You can choose to join any KiwiSaver scheme. KiwiSaver schemes are managed by private companies called KiwiSaver providers. You can also choose which KiwiSaver provider to invest your money with. If you didn’t choose your provider, then you will have been placed with a default provider. There are 25 KiwiSaver providers in the market of which nine are default providers.
As well as choosing which provider to join, you also get to choose the type of fund or funds you want to invest in. The type of fund you invest in will be the key to how much will be in your KiwiSaver at retirement. Most people in KiwiSaver are not in the right fund type for their situation – its pays to get this checked.
KiwiSaver is not guaranteed by the Government. This means you make your investment choices in a KiwiSaver scheme at your own risk.
The earlier you start the better off you will be because this will allow you to take advantage of investment returns and the Government contribution. KiwiSaver is only going to become more and more important as time marches on. For many it will soon be their second largest asset after their house.
If you would like to know more about KiwiSaver or join KiwiSaver, then Book here for your complementary 10min call It’s just the SMART thing to do.
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Information contained in this blog is of a general nature only and is not intended as personalised financial advice.
We recommend seeking personalised financial advice from your adviser before purchasing or changing a financial product.