Automatic payments ideal
Best way to ensure you don’t miss out on top up says Shelley Hanna
It is better to budget for a similar lifestyle, replacing work spendingwith additional travel or leisure activities.
QI’ve been in Kiwisaver for a fewyearsnowand mybalance is $30,000. Because I amselfemployed, Iput in $1042 injune each year to get the full governmenttop up. Except for this year, wheni simply forgot so I missed outon$521. Is there a betterwayto go? I am55 and expect toworktill I’m 65.
AYouare not the first person whoforgot to topuptheir Kiwisaver account. It is an expensive mistake that has cost you $521— plus future investment earnings on that money.
In future, set upa regular direct debit or automatic payment at intervals to suit your cashflow. For adirect debit you will need to fill out a formprovided by your provider. If you prefer an automatic payment, you can find your provider’s bank account details and set themupas a payee through internet banking. Most have their details preloaded. To find them, go to Payees and then Add. Type in Kiwisaver and 22 Kiwisaver providers will be shown. Select your provider and save them as a Payee. If your provider’s bank account details are notamongthe 22 listed, you will have to phone them to get the information.
Toreceive the full government topupyou will need to contribute $87 permonth yourself. If you continue in this way, according to the Sorted Kiwisaver savings tool you mayhave around $58,724 at age 65. This would give you$54 perweek to age 90. Note that this is the projection for a balanced fund and is not adjusted for inflation.
Inote that you are self-employed. Youmayhave a business that you plan to sell before retirement. You mayhave other assets as well. However, if Kiwisaver is your main source of retirement income will $54 perweek be enough to top upyour Nzsuper? Currently the rate ofnz Super for a single person is $424 per weekafter tax. Changes could be madetonzsuper by the time you reach the age of 65, but the Government is likely to take a long lead in so you will be forewarned. The bottom line is— set aside as muchas you can afford tonowfor a comfortable retirement in the future. Somepeople assume that once they retire they will spend less than before. This is not always the case. It is better to budget for a similar lifestyle, replacing work spending with additional travel or leisure activities.
I recommendyou explore the Sorted Kiwisaver Savings Calculator. Youcan play around with your contribution level as well as your risk profile and see what difference it makes. Goingup to a growth fund gives you $65 perweekrather than $54 for example. Saving $87 perweek instead of per monthwill give you over $100,000 at age 65.
Of course, these projections are simply that— projections. Youcan click to through to assumptions and methodology to find the rationale behind them.
Shelley Hanna is an authorised
financial adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 06 870 3838 or going to peak.net.nz.
The information contained in this article is of a general nature and is not personalised. Send your questions
about Kiwisaver to shelley.hanna@peak.net.nz