Automatic payments ideal
Best way to ensure you don’t miss out on top up says
It is better to budget for a similar lifestyle, replacing work spending with additional travel or leisure activities.
QI’ve been in KiwiSaver for a few years now and my balance is $30,000. Because I am selfemployed, I put in $1042 in June each year to get the full government top up. Except for this year, when I simply forgot so I missed out on $521. Is there a better way to go? I am 55 and expect to work till I’m 65.
AYou are not the first person who forgot to top up their KiwiSaver account. It is an expensive mistake that has cost you $521 — plus future investment earnings on that money.
In future, set up a regular direct debit or automatic payment at intervals to suit your cashflow. For a direct debit you will need to fill out a form provided by your provider. If you prefer an automatic payment, you can find your provider’s bank account details and set them up as 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 not among the 22 listed, you will have to phone them to get the information.
To receive the full government top up you will need to contribute $87 per month yourself. If you continue in this way, according to the Sorted KiwiSaver savings tool you may have around $58,724 at age 65. This would give you $54 per week to age 90. Note that this is the projection for a balanced fund and is not adjusted for inflation.
I note that you are self-employed. You may have a business that you plan to sell before retirement. You may have other assets as well. However, if KiwiSaver is your main source of retirement income will $54 per week be enough to top up your NZ Super? Currently the rate of NZ Super for a single person is $424 per week after tax. Changes could be made to NZ Super 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 much as you can afford to now for a comfortable retirement in the future. Some people 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 recommend you explore the Sorted KiwiSaver Savings Calculator. You can play around with your contribution level as well as your risk profile and see what difference it makes. Going up to a growth fund gives you $65 per week rather than $54 for example. Saving $87 per week instead of per month will give you over $100,000 at age 65.
Of course, these projections are simply that — projections. You can click to through to assumptions and methodology to find the rationale behind them.
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 t o shelley.hanna@peak.net.nz