KiwiSaver: Opt in and dial up your savings
If you think KiwiSaver isn’t for you because you’re self-employed, you’re probably missing out on thousands of dollars in government contributions.
The retirement savings scheme isn’t just a smart move for salaried employees. Opt in when you work for yourself and you’ll still reap the rewards. Here are some tips for powering up your savings.
Get in to get the most out
Even putting a small amount each week into KiwiSaver can make a big difference to your sunset years.
If you put in at least $20 a week — or $1,043 a year — into your fund, you’ll receive the full government top-up of $521 a year.
If you don’t want to commit to a set amount each week, you can make lump sum payments through Inland Revenue or your KiwiSaver provider when you choose to.
Case study
Doing the sums
Leila is a 35-year-old freelance writer who makes $40,000 a year before tax. She doesn’t know if joining KiwiSaver would be worth it because she doesn’t have an employer to top up her savings.
KiwiSaver savings calculator — Sorted
She’s started thinking seriously about her retirement, but wonders if another kind of investment would be a better bet.
She has $200 a month to spare and so would be entitled to the full government top-up. After learning this means an extra $15,630 from the government that she can invest before she retires at 65, she decides KiwiSaver is the way to go.
Case study
Long-term lesson
Jake is a 42-year old landscape designer who makes $60,000 a year before tax. He joined KiwiSaver in 2010 and has $5,000 in his fund.
He’s getting married this year and doesn’t have a great deal of cash to spare.
He currently contributes the minimum $20 a week to qualify for the full government top up. However, he works out if he ups his payments by just $3 a week to $23 he’ll get an extra $3,934 by the time he retires at 65. For less than the cost of a flat white, it seems silly not to.
Check you’re in the right fund
If you don’t choose a KiwiSaver fund, Inland Revenue will put you in one of nine default funds. This may not be the best option for you.
The right fund for you will depend on your situation and attitude to risk. The riskier the fund, the higher your potential returns. Use Sorted’s Fund Finder tool to find the right type of fund for you and compare different funds of that type.
Fund finder(external link) — Sorted
Don’t pay more tax than you need to
Check your rate is right for your income — especially if your annual income varies greatly year to year. Ask your KiwiSaver provider.
If you have employees, make sure you know your KiwiSaver obligations.
These include providing KiwiSaver information packs to all new staff and existing ones if they ask.
