Three KiwiSaver Decisions For Greater Financial Certainty

27 January 2023 by Khanin Saikia in KiwiSaver

Three KiwiSaver Decisions For Greater Financial Certainty

Out of the many questions I answer for my clients about their KiwiSaver, three key questions often seem to do the rounds. Though these three questions seem very simple, the answer one gives can make a lot of difference to their financial wellbeing. This is because these questions shape three crucial decisions Kiwis make about their KiwiSaver savings. Regrettably, the reality is, Kiwis often fail to get them right.

So, what are these three key questions?

  1. How much to save for retirement?
  2. Where to allocate regular contributions?
  3. When to retire?

Let us try to answer these questions and see if we can get them right!

Assuming you are a 25-year-old full-time employed individual, earning a gross income of $50k a year with employer and employee contribution of 3% each, you’ve just decided to start your KiwiSaver in a defensive portfolio (1.5% after-tax return), with a plan to retire at age 65.


Decision One: How much to save for retirement?

Let’s take the different KiwiSaver contribution rates and see what impact they have on the portfolio value at age 65.


Decision Two: Where to allocate your regular contributions?

There are usually five different options when choosing your KiwiSaver fund type, this decision is usually based on the level of risk that you are able and willing to take. If you find yourself asking "do I go Defensive, Conservative, Balanced, Growth, or Aggressive?" See below:


Decision Three: When to retire?

More and more investors want to continue working past 65 and, as it turns out, doing so can make a difference to your KiwiSaver balance.


Impact Summary

So, the relative impact of these three decisions can be summarised below.


What about getting all Three questions answered correctly? Have a winning combination?

Saving 10% in an aggressive KiwiSaver fund to age 75 will generate a pre-retirement portfolio of approximately $2,736,244 - pretty simple yet very powerful, right? Especially when you consider a modest income of $50k a year.

Well, it’s not that simple as the hardest part is to remain disciplined with your money, year after year for decades. Moreover, there is no ‘one size fits all’ solution here – every individual's personal and financial goals, desires, and risk appetite is likely to be different. Nevertheless, the key is to work out the ‘most suitable combination’ of the three key decisions about your own KiwiSaver savings.

Remember, the sooner you find your winning combination, the better!


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Article by Khanin Saikia

Adopted from: 

NZ Herald article written by Ben Brinkerhoff | Head of Adviser Services, Consilium

Opinion: ‘Three ways to boost your KiwiSaver’

3 January 2022

Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular person's objectives, financial situation or needs. Any opinions contained in it are held by the author as at the report date and are subject to change without notice.


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