Maximising KiwiSaver Across your Lifetime



By Jean Strock 25 October 2023

KiwiSaver started back in 2007 so has been available to eligible Kiwis for 16 years. However, average balances remain worryingly low at only $27,379* with many Kiwis not currently contributing. While the current cost of living crisis may have forced some to prioritise their mortgage over KiwiSaver, here are some tips to help maximise your KiwiSaver investments throughout your lifetime.

1. Starting out, your first real job.

If not already in KiwiSaver, you will automatically be enrolled when you first become employed. Choose a good scheme that provides a high and consistent after fee return, in line with your priorities and ethics. Take on risk, a Growth or Aggressive scheme. Consider saving 6-10% of your wages before you get used to your new found wealth and before establishing your cocktail budget!

2. Prior to first home purchase

Reduce risk if you are needing to access your KiwiSaver funds to purchase your first home, especially when actively looking to buy. Your KiwiSaver fund should be as close to cash as possible. You don’t want markets to fall by 20% just as you have to settle your purchase.

3. You have your first home!

Congratulations! Owning your own home can be an important part of retirement preparedness. At this point you may want to reduce your KiwiSaver contributions back to 3% to prioritise paying the mortgage. You have to leave $1,000 in your KiwiSaver Fund so load up on risk again. KiwiSaver now reverts to being a very long- term retirement savings scheme.

4. Along the way

It could be many years between your first home purchase and retirement. Get into the habit of reviewing your investment regularly. Are you still in a high performing fund? Can you increase your contributions again to 4% or 6% or even 10%?

5. At times of market stress

Don’t panic! You can ride out volatility in a long-term investment. Don’t get caught in the trap of “selling low and buying high” and don’t convince yourself you can time getting in and out of markets. Most market timing is luck, not skill, and it is important to stay invested to avoid missing out on recovering markets.

6. Retirement

Time to enjoy the fruits of your labour. With increasing longevity retirement could last for 25 years or longer. You don’t have to invest conservatively just because you have turned age 65! This is still a very long-term investment.

Prior to retirement – establish a cash or low volatility pool of savings to fund spending in the first 3 to 5 years of retirement. You can do this with your KiwiSaver provider or hold cash in the bank.

During Retirement – Maintain some risk in your longer-term KiwiSaver investment. It is important to maintain capital growth and inflation protection so your money will last as long as you do.

Top up your pool of low-risk savings as you go through the years, especially when your investments have had a good year. This ensures your near-term spending is protected from the ups and downs of the markets.

7. Get some financial advice

Saturn’s sister company, National Capital, provides free personalised digital financial advice for KiwiSaver investors. National Capital partners with you to ensure you get the best out of KiwiSaver across your lifetime.

Take the National Capital KiwiSaver Healthcheck by clicking here

*Melville Jessop Weaver December 31 2022

The views expressed in this article are the views of the author. The information provided is of general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances