Here are the key intricacies to be aware of in order to optimise your KiwiSaver ready for a happy and long retirement.
Your KiwiSaver, if set up right, can be a game-changer when it comes to your retirement. But to make sure it’s as game-changing as possible, it’s important to ask the right questions of your scheme.
When I mention saving for the future, we might think saving up for a holiday or some renos … but I want to talk about saving that big future … 65.
What’s that nest egg going to look like when you’re 65? And will your KiwiSaver have done its job by then?
The big thing to keep in mind is that KiwiSaver is not a set and forget scheme. There are layers to this scheme that you need to stay aware of. These key layers include:
· Tax & Contributions: Considerations around your tax rates and contribution amounts.
· Changes: There are many ongoing tweaks being made to the scheme. For example, on 1 April this year there were changes to the contributions holiday and to the percentages you can contribute; from July, KiwiSaver being opened up to the over 65s; and there are more changes in the pipeline from April 2020.
· Fund Type: There are funds that will generate a return starkly different than others (don’t just go with the default).
· PAYE vs Self-Employed: There are considerations for self-employed Kiwis that differ slightly (with contributions) to those on PAYE.
· Withdrawing Funds: There are several instances where you can dip into your KiwiSaver funds, including: boosting your first-home deposit, if you are permanently immigrating overseas, or as your retirement lump sum. Depending on when you will be (next) needing your funds, will determine a course of action with how your KiwiSaver funds are invested.
With many KiwiSaver balances getting to be substantial, talking with an adviser about how your KiwiSaver funds fit into your big picture will ensure you’re getting the best of your investment.
When it comes to top tips for your KiwiSaver success, your best plan is to talk with someone who does this for a living, who knows the ins and outs and can give you the information you need to make that informed decision.
Simon O'Neill is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.