SHORT GUIDE

Time for a KiwiSaver check-up?

Retirement planning – it’s a journey, not a destination. By regularly checking that your KiwiSaver is aligned with your needs, you can ensure that you’re on the right path for your retirement plans and goals.

In this guide, we’ll provide some prompts to get you started: why a KiwiSaver check-up is important, how often it is recommended, what to check and more. Enjoy the read and contact us for any questions.

Time to give your KiwiSaver a check up?
Disclaimer
IMPORTANT: Please note that the content provided in this guide is of a general nature. It is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance. Feel free to get in touch if you have any questions, comments or concerns.

What is the value of a KiwiSaver check-up?

KiwiSaver is designed primarily for the long term, to help people save for retirement. So, you’re in it for the long haul. And for the most part, you don’t need to do much about it: as long as your KiwiSaver is aligned with your needs and goals (and you keep contributing to your account), you can just let KiwiSaver do KiwiSaver – which is, grow in the long run.

However, focusing on the long term doesn’t mean ‘set and forget’ until the age of eligibility (currently 65). In fact, as you steadily progress through life, many things will likely change in and around it, and so may your retirement planning needs.

That’s why we recommend checking in with KiwiSaver reasonably regularly, but not too frequently: once a year is the ‘sweet spot’ for most people, and perhaps more frequently the closer you get to retirement. This way, you can ensure that this important tool is in ‘working condition’’ for the rest of your journey, without having to constantly keep an eye on it.

Where are you at in life?

Just like any other long journey, when it comes to retirement planning and KiwiSaver, it’s crucial to know where you are now, how far off your destination is, and how much you need. Then, and only then, can you focus on how to get there.

So, the first question to ask yourself is: where are you at in life? We usually divide the retirement savings journey into five life stages:

  1. Starting out – 18 to late-twenties.
  2. Growing – early-thirties to mid-forties.
  3. Consolidating – late-forties to mid-fifties.
  4. Nearing retirement – late fifties, early sixties.
  5. Retirement – sixties onwards.

Your KiwiSaver check-up checklist

From risk factors to personal values, here are some important factors in your KiwiSaver check-up:

Your risk capacity

All types of investment entail some level of risk in exchange for (potentially) higher returns. Your risk capacity is the ability for your investment to tolerate short-term volatility. It’s typically driven by a combination of factors, including your investment time horizon: the longer you have until retirement, the more ‘aggressive’ you may afford to be with your KiwiSaver (for example, by choosing a ‘growth’ or ‘aggressive’ fund type). On the other hand, if you plan to withdraw your KiwiSaver funds within a few years (to buy your first home or retire), you may like to choose a less risky option until then. But this is not all.

Your risk tolerance

As humans, we’re emotional beings. And as much as we need to take emotions out of the investment equation (by focusing on the long term rather than short-term volatility), we can only control them to a certain extent. Your risk tolerance is your own personal perspective on investment risk. For example, how would you feel about your fund losing 30 per cent of its value? Would that make you concerned, or would you just accept it as part of short-term volatility in the investment markets?

The reality is, investment markets do go up and down: it’s their nature. But by choosing a fund that aligns with both your risk capacity and risk tolerance, you could minimise the risk of ‘impulse decisions’ that might hurt your long-term outcome.

Your contribution rate

Think about your circumstances and goals. Are you contributing enough to stay on track? Can you afford to save a bit more on a regular basis? Many people tend to underestimate the difference that even a slightly higher contribution rate can make over time. The reality is, every small step counts in your long journey to retirement. And by saving more regularly, with the power of compounding interest on your side, you can really step up the pace.

Your values

How important it is that your KiwiSaver considers environmental, social and governance issues? The investment landscape is changing, driven by growing demand for socially responsible solutions. So, checking whether your KiwiSaver fund is aligned with your values is also crucial. And remember: you won’t necessarily have to choose between your values and prospective returns, depending on the ESG-type factor you choose to focus on.

Try our KiwiSaver Check-Up tool

By reviewing your KiwiSaver regularly (but not too often), you can make adjustments along the way, and ensure that your savings are moving in the right direction for your needs and plans.

We have developed a handy KiwiSaver Check-Up tool, designed to support regular reviews: click here to try it. And of course, we’re here to help with any questions you may have.

KiwiSaver Checkup

What is the value of a KiwiSaver check-up?

KiwiSaver is designed primarily for the long term, to help people save for retirement. So, you’re in it for the long haul. And for the most part, you don’t need to do much about it: as long as your KiwiSaver is aligned with your needs and goals (and you keep contributing to your account), you can just let KiwiSaver do KiwiSaver – which is, grow in the long run.

However, focusing on the long term doesn’t mean ‘set and forget’ until the age of eligibility (currently 65). In fact, as you steadily progress through life, many things will likely change in and around it, and so may your retirement planning needs.

That’s why we recommend checking in with KiwiSaver reasonably regularly, but not too frequently: once a year is the ‘sweet spot’ for most people, and perhaps more frequently the closer you get to retirement. This way, you can ensure that this important tool is in ‘working condition’’ for the rest of your journey, without having to constantly keep an eye on it.

Where are you at in life?

Where are you at in life?

Just like any other long journey, when it comes to retirement planning and KiwiSaver, it’s crucial to know where you are now, how far off your destination is, and how much you need. Then, and only then, can you focus on how to get there.

So, the first question to ask yourself is: where are you at in life? We usually divide the retirement savings journey into five life stages:

  1. Starting out – 18 to late-twenties.
  2. Growing – early-thirties to mid-forties.
  3. Consolidating – late-forties to mid-fifties.
  4. Nearing retirement – late fifties, early sixties.
  5. Retirement – sixties onwards.
Your KiwiSaver check-up checklist

Your KiwiSaver check-up checklist

From risk factors to personal values, here are some important factors in your KiwiSaver check-up:

Your risk capacity

All types of investment entail some level of risk in exchange for (potentially) higher returns. Your risk capacity is the ability for your investment to tolerate short-term volatility. It’s typically driven by a combination of factors, including your investment time horizon: the longer you have until retirement, the more ‘aggressive’ you may afford to be with your KiwiSaver (for example, by choosing a ‘growth’ or ‘aggressive’ fund type). On the other hand, if you plan to withdraw your KiwiSaver funds within a few years (to buy your first home or retire), you may like to choose a less risky option until then. But this is not all.

Your risk tolerance

As humans, we’re emotional beings. And as much as we need to take emotions out of the investment equation (by focusing on the long term rather than short-term volatility), we can only control them to a certain extent. Your risk tolerance is your own personal perspective on investment risk. For example, how would you feel about your fund losing 30 per cent of its value? Would that make you concerned, or would you just accept it as part of short-term volatility in the investment markets?

The reality is, investment markets do go up and down: it’s their nature. But by choosing a fund that aligns with both your risk capacity and risk tolerance, you could minimise the risk of ‘impulse decisions’ that might hurt your long-term outcome.

Your contribution rate

Think about your circumstances and goals. Are you contributing enough to stay on track? Can you afford to save a bit more on a regular basis? Many people tend to underestimate the difference that even a slightly higher contribution rate can make over time. The reality is, every small step counts in your long journey to retirement. And by saving more regularly, with the power of compounding interest on your side, you can really step up the pace.

Your values

How important it is that your KiwiSaver considers environmental, social and governance issues? The investment landscape is changing, driven by growing demand for socially responsible solutions. So, checking whether your KiwiSaver fund is aligned with your values is also crucial. And remember: you won’t necessarily have to choose between your values and prospective returns, depending on the ESG-type factor you choose to focus on.

Try our handy tool

Try our KiwiSaver Check-Up tool

By reviewing your KiwiSaver regularly (but not too often), you can make adjustments along the way, and ensure that your savings are moving in the right direction for your needs and plans.

We have developed a handy KiwiSaver Check-Up tool, designed to support regular reviews: click here to try it. And of course, we’re here to help with any questions you may have.

TIME FOR A RETIREMENT CHECK UP?

How much you’re contributing, your fund type, your risk appetite and capacity, and more: use our handy Quiz to take a good look at your KiwiSaver settings and goals.

Like to grow your retirement saving savvy? Read on…

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Get the latest Future Focus Report

Like to stay informed about personal finance and retirement planning? Our Future Focus report is for you. - Click on image to download