Grow Your KiwiSaver Faster with Small Contribution Increases
When it comes to building a solid KiwiSaver balance, the little decisions you make today can have a huge impact on your future. Even a small increase in your KiwiSaver contributions could lead to significantly more money in your retirement fund, giving you a much more comfortable retirement lifestyle.
It all comes down to the magic of compounding returns and the power of time. By making slight adjustments to your contributions now, you can set yourself up for a much brighter financial future.
Here's How It Works
Let’s take a look at John. He’s 45 years old with a starting KiwiSaver balance of $60,000. His gross income is $90,000, and his employer contributes 3% to his KiwiSaver, which also includes government contributions. He is investing in a growth fund that averages 8% returns annually.
Now, let’s see how different contribution rates would affect his KiwiSaver balance by age 65:
Even just a 1% increase could add over $100,000 to John’s balance!
If John contributes 3% of his salary: His KiwiSaver balance grows, but not as fast as it could.
If John increases his contribution to 4%, 6%, 8%, or even 10%: The difference is huge! The more he contributes now, the greater the balance he’ll have when he’s ready to retire.
This is where the magic of compounding really kicks in. Even small increases in your KiwiSaver contributions can lead to a significant boost over time.
How to Increase Your KiwiSaver Contributions
For Employees:
If you're employed, you can easily increase your KiwiSaver contribution rate. Simply ask your employer or payroll team to update your contribution rate to 4%, 6%, 8%, or even 10%. It’s a simple process that doesn’t require much effort on your part.
For Self-Employed or Contractors:
If you’re self-employed or a contractor, you won’t have an employer automatically contributing to your KiwiSaver. However, you can still make regular contributions by setting up an automatic payment to your KiwiSaver provider. To maximise the $521 government contribution each year, make sure to contribute at least $1,042 annually. By setting up a regular automatic payment, you can ensure you’re on track to hit this target without thinking about it.
Make KiwiSaver Work for You
If you’re unsure which contribution rate is best for you, or if you’re not sure whether your current provider is the right fit, we’re here to help. We take the time to understand what’s important to you – whether that’s higher returns, ethical investing, or simply making your retirement as comfortable as possible.
Let’s chat today and help you start building a better future for tomorrow. After all, the small changes you make today could have a big impact on your retirement down the road!
