The end of the financial year is a great time to reassess your KiwiSaver contributions to ensure you are on track to meeting your financial goals. Do you want to buy your first home? Or are you saving for retirement?
How Do I Use KiwiSaver to Buy a Home?
We have gathered our 4 top tips to maximise your KiwiSaver this financial year so you can reap the benefits in the future.
1. Increase your KiwiSaver Contributions
One of the easiest ways to grow your KiwiSaver account balance is to contribute more money to it on a regular basis.
If you are employed, you’ll likely be contributing 3% of your before-tax salary. This is the common choice amongst Kiwis. But you can contribute 3%, 4%, 6%, 8%, or even 10% of your before tax income. A simple increase of your contribution can quickly accumulate thousands in your KiwiSaver balance.
For example, if you have a salary of $75,000, and contribute 3%, you are looking at $2250. But if you change the contribution to 8%, you will be looking at $6000 to your KiwiSaver over a year! How good is that? Just be sure to manage your weekly budget if you change the contribution percentage. Simply let your employer know in writing that you wish to change your contribution or fill in a KiwiSaver deduction form to give to your employer.
2. Contribute your Savings
If you have some savings sitting around in your bank account, you can deposit those extra funds into your KiwiSaver account. This is a great way to maximise the money as it won’t just be sitting in your bank account. This money will be able to grow over time. Just remember, that once you transfer the money into your KiwiSaver, you will not be able to take it back out until you reach retirement age or use it to buy your first home.
Making the Most of Your Extra Savings: Should You Choose KiwiSaver or Explore Other Options?
3. Choose the Right Fund
Everyone is going to have different savings goals. It’s important to not just sit in the default KiwiSaver fund, as this might be the right one for you, and might not match your goals. Most KiwiSaver providers offer a range of investment funds, and there are generally five main types:
- Aggressive
- Growth
- Conservative
- Balanced
- Defensive
Take the time to consider the different types of funds, what they do, and which one might be best for your goals. For example, if you aren’t planning to make a withdrawal soon, the growth fund may work best for you.
4. Consider your Retirement Goals
When you have retired, what do you want your life to look like? Will you be travelling overseas to spend your golden years in Sicily? Or live in a beachside house in your favourite humble little Aotearoa town? While retirement may be decades away for some, considering what you might want to do, when you might want to retire, your desired income in retirement, and the value of your savings is important. It will help you choose the right fund, the right contribution amount now, and give you an idea on what you need to save in the time you have now. Remember, time is the most powerful asset when it comes to your investment!
Talk to our Friends at National Capital
National Capital can help give you a KiwiSaver Health check, to make sure you are on the right fund for your goals. They can help you diversify your investments to make sure you are protected against fluctuations in the market as well.
