KiwiSaver: Keeping your retirement fund on track

retirement bottle empty and wallet

How would you feel if you worked hard your whole life, but when it came time to retire, you didn’t have enough in your KiwiSaver to live the life you desired.

‘What I’m seeing at the moment, for clients that are planning for retirement, is that they don’t have enough in their funds to support them for more than a few years,’ says Brigette Arnold, Financial Adviser at Cambridge Partners. ‘It may mean they forego travel, upgrading a car or home renovations. Sometimes they will use that money to simply pay off a mortgage so that they’re completely debt-free for retirement.’  

So how can you get your KiwiSaver on track to achieve your goals of retirement?

Small changes now can have a big impact on your retirement savings. The power of compounding returns should not be underestimated.

Pay yourself first concept

When you adopt an approach of paying yourself first, you make a significant step towards increasing your financial well-being and long-term wealth. KiwiSaver is a great example of this concept as your funds are deducted before your salary or wages land in your bank account.

Increase your contribution

Another way to embrace the pay-yourself first concept is to increase your contribution. Before you do this there are a number of questions you should ask yourself:

  • What are you contributing now?
  • Can you afford to contribute more?
  • What are your financial goals?

KiwiSaver is an investment that you can only access for a first home deposit or retirement. In certain circumstances, you may also be able to withdraw funds if you experience significant financial hardship. First-home and hardship withdrawals mean you’ll have a lot less at retirement, when you may need it most.

You may consider increasing contributions with a staggered approach. If you currently contribute three per cent you could increase to six per cent for the next year and then increase again to eight per cent the year after that, moving up to ten per cent the following year. Behavioural finance research shows that gradual increases in savings work well for people as they barely notice them. Increasing your contributions will have a big impact on your retirement fund in the long term.

You can easily change the amount you put into your KiwiSaver account, but only once every three months. Just let your employer know in writing and complete the deduction form.

Taking a break from the workforce?

If you’re taking a break from the workforce to focus on family or having a career break this may have a negative impact on your KiwiSaver in the long term. A recent Kiwi Wealth study reported that taking a year out of work could result in having, on average, $15,100 less at retirement.

Consider making a voluntary contribution of at least $1042.86 a year by June 30. That equates to a little over $20 per week. Your employer is not obligated to continue contributing to your KiwiSaver while you’re on a break. But you will qualify for the maximum government contribution of $521.43. That’s a 50 per cent return which is so helpful to your fund when you’re taking a break.


It’s important to understand the fees that you’re paying. Unlike performance, you can be guaranteed to pay fees. There are lots of KiwiSaver providers and their offerings and fees vary widely.

Fees always reduce your return, so there must be a good reason to pay higher fees. The best reason is that you’re regularly getting great returns. But you might also be happy to pay higher fees because you’re getting top service.

It’s important to understand why you’re paying the fees you’re paying. It might be completely fair, or you may be getting ripped off!

Choosing the right fund

The right fund for you considers your appetite for risk, pays you what you’d expect for the level of risk you choose and the time you’ll be invested, and charges reasonable fees. Talk to your Financial Adviser to ensure you’re in a fund that suits your needs.

Check your balance…but not too often

KiwiSaver is a long-term investment so there’s no need to check your balance daily or monthly. It’s a good idea to check your KiwiSaver account at least once a year to see if you’re on track to achieve your goals.

Providers send their Annual Members Statements around April or May each year. This provides a breakdown of contributions that were made by you, your employer, and the government. It will show how much you paid in fees and tax, along with the tax rate you are on. The statement also provides a projection of how much you will have at retirement based on the contributions and performance from that year. If your fund isn’t meeting your expectations talk to your Financial Adviser who can review this for you.

Don’t panic

It’s important not to panic when financial markets are experiencing a downturn. Generally, your funds will have time to recover in the long term.

The financial market crash that happened in March 2020 due to Covid, saw KiwiSaver providers experience a surge of members switching from Growth to Conservative funds. Much of this was driven by media and ill-informed journalism. Those switchers went on to lose even more money when their old Growth funds not only bounced back but went on to make record returns. Unfortunately, due to the nature of the investment, Conservative funds couldn’t capture the market rebound, leaving the switchers out of pocket.


Making small changes now will make a big difference when you retire from work. You can do this by increasing your contributions and ensuring you, at least, make the minimum contribution each year. This will help your money work harder to grow wealth. It’s important to be in the correct fund for your age, stage and goals.

Another big factor in your overall returns is fees. You will always pay fees so ensure you are happy to pay for the service you receive.

When you have concerns it’s a great opportunity to connect with your Financial Adviser as they have experienced many investment cycles. They can answer any questions and provide advice from an impartial perspective.

14 July 2022

Disclaimer: This article is general information and does not consider your financial situation or goals and does not constitute personalised advice. There are no warranties, expressed or implied, regarding the accuracy or completeness of any information included as part of this article.

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