Happy birthday, KiwiSaver! With the scheme having been in action for a decade now, we take a quick look at what’s changed, and what it means for you (and your retirement fund).
It’s kind of a big deal…
With KiwiSavers now having contributed for up to 10 years, there’s an increasing number of significant funds and retirees are beginning to reap the benefits of saving, investment and compound interest. With KiwiSaver contributing more and more to Kiwi’s wealth, the management and consideration of the fund is becoming more and more important. After years (or decades) of saving, ensuring you’re in the right fund can make a difference of tens or hundreds of thousands when retirement comes.
Changes to Superannuation age
The KiwiSaver age access remains at 65 years, but the NZ Superannuation age will be increased to 67 from 2040 – giving an extra 2 years to fill the gap, if you choose to retire at 65. You can still access KiwiSaver funds at 65, but it’s important you’ve made provisions, and have a clear budget.
KiwiSavers can also start reaping the rewards of saving and investment before retirement, with the HomeStart grant. Since 2015, the grant offers those that have been contributing for 3 years or more $1,000 for each year that you have contributed up to a maximum of $10,000. You also require atleast 10% deposit of property purchase price (which can be made up from your KiwiSaver first-home withdrawal), must meet the income criteria, and be purchasing a property under the house-price cap.
Although it means making a withdrawal from retirement funds, owning property (and having it paid off!) can be a key step towards a comfortable retirement. Read more: Retirement – can you afford it without a house?
The $1,000 kickstart for new KiwiSaver members was scrapped in 2015. It’s certainly not a reason not be signed up, but it’s worth noting it reduces funds at retirement age by an estimated $10-20,000 (over a 40 year working life) so the value of compounding interest isn’t something to under-estimate.
Like some advice to help make the most of your KiwiSaver? Get in touch to see how we can help.