Unfortunately retiring comfortably and stress-free will not be possible for all New Zealanders.
New Zealand Super payouts are often less than what Kiwi’s have become accustomed to living on. Understandably the numerous investment options out there can be overwhelming and confusing. But sticking your head in the sand will not fix your financial future.
If you are not actively planning for your retirement – you have to ask why?
Introducing KiwiSaver… This flexible, voluntary savings option is a no brainer! If you get the right financial advice and choose your investment strategy wisely – your KiwiSaver account can help set you up for the future and make your money go further.
KiwiSaver is paid on top of your New Zealand Super. As long as you meet certain requirements, the government will make an annual contribution to your KiwiSaver account. The government pays 50c on every dollar you save up to $521.43 per year.
To receive the maximum amount of $521.43 from the government, you need to save $1042.86 annually. If you choose to save more than $1042.86 in a year, the government will still only pay $521.43
On top of the government contribution, your employer must also pay 3% (less tax) of your pay into your KiwiSaver account. It really is a no brainer!
If you are self-employed or unemployed, you can still benefit from the government grants by opening a KiwiSaver account and making your own regular voluntary contributions.
The objective of having a KiwiSaver account is to supplement your retirement savings. You, therefore, cannot access your money until you are 65 years old when you qualify for your New Zealand Super.
However, there are special circumstances where you may be able to withdraw money from your KiwiSaver account: If you become ill or if you have significant financial hardship. And if you have been a KiwiSaver member for 3 or more years, you may be able to withdraw funds to purchase your first home. This, however, does not include investment properties (I reckon it should!).
How exactly does KiwiSaver work?
Money is invested on your behalf by your chosen KiwiSaver provider. You can choose various investment options which range from conservative to higher-risk growth funds. Your returns will depend on the investment funds you choose, the timeframe of your investment, the market and fees deducted.
Ultimately you are after the highest returns…
But what will work best for you? Understanding the level of risk you are willing and able to take based on your age and circumstances, and then choosing the correct strategy is paramount!
This is where advice from a trustworthy and experienced financial adviser comes into play.
Most people we meet are unwittingly investing in the wrong type of fund and missing out on hundreds of thousands of dollars of growth in their portfolio.
For example, we recently advised a client in her 20’s to change from a slow-growth conservative fund to a more growth-oriented solution. Even if there are big ups and downs in the market, this fund will likely yield much higher returns over the life of her investment. From the age of 56, the type of fund we have put her in will automatically rebalance her portfolio annually. This means she will incrementally be taking less and less risk as she ages. If the market does drop as she nears retirement, she won’t lose as much money as if she’d stayed in a high-growth fund, having to then wait for it to correct itself.
At Goodlife, we believe that a sound financial plan tailored to your unique circumstances and needs – will ensure that your retirement income lasts so you can have the retirement you really want.
We have worked with Kiwisaver fund managers at NZ Funds Management for many years. As the longest-running funds management company in New Zealand, they are one of the top-quartile KiwiSaver performers. This year alone, their growth portfolio is close to 15%!
We recommend that all of our clients sign up for the LifeCycle Fund with NZ Funds. Spend literally two minutes by clicking on this link and move to our preferred provider (that’s all you have to do!):