3 Things You Can Do to Maximise Your Kiwisaver
The vast majority of Kiwi’s never receive advice on their Kiwisaver, potentially missing out on hundreds of thousands of dollars at retirement. With Kiwisaver likely to be your second largest asset at retirement after the family home, it’s essential it’s set up to maximise your return. Here are 3 things you can to do get the most out of your Kiwisaver today.
Tip 1. Contribute as much as you can afford – you can choose to contribute either 3, 4 or 8% of your gross income into your Kiwisaver fund. If you have no other investment or savings schemes in place, it’s recommended to contribute as much as you can afford. If you’re single with no kids or you’ve paid off the mortgage and the kids have left home, consider ramping it up to 8%. This will make a huge difference in how much you end up with at retirement and is also a great way for first home buyers to accelerate their first home deposit. As Kiwisaver is deducted from your pay before it hits your account, you won’t even know it’s gone!
Tip 2. Ensure you receive the government’s annual Member Tax Credit – New Zealander’s are missing out on over $300 million a year in Member Tax Credits due to not meeting the minimum contribution levels. All you have to do is ensure you contribute a minimum of $1,043 per year into your Kiwisaver and you’ll receive a free $521 from the government. If you earn at least $35,000 per year and contribute at a rate of 3%, you won’t need to worry, however, if you have reduced your hours to part time, have taken unpaid leave throughout the year or are self employed, you may fall short and will need to make a voluntary payment to reach the minimum threshold. MTC’s work out to over $20,000 over the average working lifetime so it’s well worth making sure you get it!
Tip 3. Make sure you invest in the right fund – the fund you choose will generally depend on your age and risk profile. Being in the right fund with a provider that is making quality investment decisions can help you be tens if not hundreds of thousands of dollars better off at retirement. If you have more than 10 years to go until you start withdrawing your Kiwisaver, consider a high growth fund such as Generate’s Focussed Growth fund. With a net return after fees of 16.4% to the year ended 30 September 2018 (Morningstar Kiwisaver Report), it’s a lot more than you’ll get at any bank!
Give us a call to find out whether you are getting the most out of your Kiwisaver today.