There’s a lot to consider when it comes to retirement planning, including budgeting, insurance, and wills, but let’s break it down into smaller, achievable chunks.
Review your current expenses
Take a look at your current spending to help you better estimate your likely expenditure in retirement. This will also help you to identify areas of your spending that could be reduced to get you closer towards your retirement savings goal.
Consider any living costs you may have during retirement. Are you planning to move closer to family? Do you want to live in a retirement village? Your goals will inform how much you will need to have at retirement to make them a reality.
Check what cover you have in place
Reviewing the insurance you have in place is something everyone should do on a regular basis, but it’s even more important when considering your retirement as health issues are more likely to increase as you get older.
It’s a good idea to look at the insurance you have now, and factor in what may change when you retire. If you don’t have insurance in place, now is a great time to sit down with the professionals and get it sorted.
Set your KiwiSaver up for success
Because KiwiSaver is designed to help you save for retirement, having yours set up in a way that is best for you and your retirement goals is important. If you want to have a comfortable retirement, you’ll need to figure out exactly how much you’ll need as your Superannuation may not be enough.
Choosing the right KiwiSaver fund for you could mean tens of thousands more at retirement so look into your options and get the right advice to help you decide.
Start by checking out our KiwiSaver calculator here.
Get a will sorted
While you’re planning for your retirement, take into account any assets you will have that you may want to leave to family or friends when you pass away. If you have a will that was written when your children were young for example, this may not be appropriate if they’re now adults.
If you want to start getting some plans in place for your retirement, book in a meeting with one of our friendly advisers now. Then rest easy knowing that you’re on track to have the retirement you’re aiming for.
How do you know if you’re in a default fund?
You might be in a default fund if you enrolled in KiwiSaver quite some time ago and aren’t really sure what fund type you’re in.
Usually you get sent out an annual statement from your KiwiSaver provider (i.e. Booster, Generate, etc.) that details which fund type you’re in and what your returns have been for the year. If you can’t remember receiving this, or you’ve lost it, you’ll need to give your provider a call to find out which fund you’re in.
If you’re not sure which KiwiSaver provider you’re with, you can call 0800 KIWISAVER to find out – you’ll need your IRD number handy.
I am in a default fund, what do these changes mean for me?
If you are in a default fund with one of these providers – BNZ, Booster, BT Funds Management, Kiwi Wealth, Simplicity and Smartshares – your KiwiSaver will stay as a default but it will move into a more balanced fund. If you want to consider the options you have for your fund, get in touch with one of our advisers and they can get you sorted.
What if my default fund is with another provider?
As AMP, ANZ, ASB, Fisher Funds and Mercer will no longer have default fund licences, after the 1st of December you will automatically be transferred to a new provider if you have a default fund with any of these providers.
Is it bad to be in a default fund?
If you’ve found out that you are in a default fund, this isn’t necessarily a bad thing – it all depends on your own situation.
However, if you do choose to stay in a default fund, it could mean that you’ll be missing out on thousands, or even hundreds of thousands of dollars at retirement.
So before you make any final decisions, it’s important to understand what other fund types are out there, and whether there may be another one better suited to your needs.
What fund is best for me?
Figuring out what fund is best for you and your situation can be overwhelming, so have a chat with one of our advisers and they can help you determine what type of fund is most suited to your KiwiSaver goals.
How do I organise a meeting?
Sitting down with our advisers is easy! Not only will you get some advice on the KiwiSaver options available to you, but you’ll also go into the draw to win $10,000 worth of prizes in our latest summer giveaway! One lucky winner will receive a Weber Family Q and BBQ accessories.
Simply book a KiwiSaver review with Haven or refer a friend to go in the draw to win some fantastic summer prizes every fortnight.
Terms and Conditions apply
Competition period is from 15th November 2021 to 31st March 2022.
A PIR, or Prescribed Investor Rate, is the amount of tax you pay on the funds in your KiwiSaver account.
Because KiwiSaver is an investment, any returns you receive from this investment is taxed at a rate that’s based on your income. You’ll be taxed at one of the three PIR rates – 10.5%, 17.5% or 28%.
According to the IRD, around 1.5 million Kiwis have the wrong PIR associated with their KiwiSaver earnings, and this can lead to a few problems.
Why PIR is important
You need to make sure you’re paying the correct amount of tax on your KiwiSaver investment otherwise you might be paying too much or too little.
You should check in with your KiwiSaver provider to make sure your PIR is correct, especially because the default tax rate is set at 28%, the highest rate available.
Which PIR should I be on?
That will depend on your taxable income. You can use this calculator on the IRD website to work out your correct PIR rate.
How can I check my PIR?
To check your PIR, you can login to your current KiwiSaver account, or contact your KiwiSaver provider or the IRD.
It’s good practice to check in with your KiwiSaver provider at the end of every financial year, just in case your income has changed and you’re now on the wrong PIR.
What if I’ve paid too much?
In previous tax years, if you were taxed at a higher PIR rate, you wouldn’t be able to receive a refund of the overpaid tax.
However for the tax year 1 April 2020 to 31 March 2021 and going forward, there have been some updates made to this. If you’ve been paying a higher PIR than required for the last tax year, you might be eligible for a refund. Get in touch with the IRD if you think this might apply to you.
What if I’ve paid too little?
If you’ve been taxed at a lower PIR rate than you needed to be, you might owe some tax. It’s best to check in with the IRD to make sure.
If you need a bit more detail around what a PIR is and how you can figure yours out, our advisers are on hand to help. Just get in touch with us to book a free, no-obligation review.
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Where there’s a will, there’s a way
When you die, your KiwiSaver funds become part of your estate, along with any other assets you might have. How your KiwiSaver funds get allocated will depend on whether or not you have a will that specifies what you want to happen with that money.
If you have an up-to-date will that outlines how you want your assets, including your KiwiSaver funds, to be distributed, this makes life a lot easier for the loved ones you leave behind.
Make sure that you pass on the details of your KiwiSaver provider to your next of kin so that should you pass away, they will know who to contact about getting the funds paid out to the right person or people.
What if you don’t have a will?
If you pass away without making a will, it gets a bit more complicated. Rather than you being the one who decides who gets your assets, it will all be divided up according to the law. This means that if you wanted your KiwiSaver funds to go to a particular person, that might not happen if you don’t have a will.
Dying without a will is also a costly and lengthy process for your loved ones. They would need to make an application to the court to get someone appointed to deal with your assets on your behalf. If your family is somewhat estranged, this could be challenging.
Your KiwiSaver balance and your estate
If your KiwiSaver balance is less than $15,000 NZD when you pass away, your next of kin can apply directly to your KiwiSaver provider to release the funds. However, because the average KiwiSaver balance in New Zealand is around $20,000, it’s usually a lengthier process, especially if you don’t have a will in place.
Want to find out more?
Get in touch with us to chat through your current KiwiSaver situation to ensure you’re maximising your retirement savings. Our advisers can also supply you with a handy will kit template to get your will sorted if you haven’t already. Note: you will need to do your own due diligence with a lawyer for your will to ensure its validity.
Choose a provider
You’ll need to do a bit of research to figure out which provider is best for you. This might seem like too much of a hassle and this is where an adviser can really help. They can talk you through your options so you can make an informed decision. Your adviser can then get everything sorted with your chosen provider, leaving you with less to worry about!
Make voluntary contributions
You can contribute as much or as little as you like, but it’s best to check if your provider has a minimum contribution amount. Set up an automatic payment if possible to make sure you’re contributing regularly. If you have an irregular income, you might take a different approach, but keeping up regular payments will be a big help come retirement.
Receive the Government Contribution
Each year, the government matches your KiwiSaver contributions at 50 cents per dollar up to $1043. To receive the full government contribution of $521, you’ll need to contribute at least $1043 during the KiwiSaver year (1 July – 30 June) – this is around $20 per week. If you’re not contributing regularly, you can also put in a lump sum to make up this amount before the end of June.
Get your employees sorted
If you employ staff in your business, make sure you know the law when it comes to KiwiSaver. You’ll need to make KiwiSaver available to any of your employees who want it, enrol new employees in KiwiSaver when they start, and arrange their salary deductions. You’ll also need to put in at least 3 percent for employer contributions.
If you’d like to know more about how to make the most of your KiwiSaver while you’re self-employed, get in touch with our team today!
I joined KiwiSaver only very recently, can I still access my funds now that I’m 65?
Within the past couple of years, there have been a few changes for those aged 60-64 who wanted to join KiwiSaver for the first time.
One of those changes was a lock-in period of 5 years – if you joined KiwiSaver before 1 July 2019 and were aged between 60-64, you would have been locked into KiwiSaver for 5 years. This meant that you actually couldn’t withdraw your KiwiSaver funds when you turned 65.
Updates to this were made in April last year that now allow you to withdraw your funds when you turn 65 by opting out of KiwiSaver anytime after you turn 65, or you can keep your funds for the full 5 year term and withdraw them after that.
I’ve turned 65 and I’m still contributing to my KiwiSaver – will I keep receiving the Government Contribution every year?
Unfortunately once you reach the age of 65, you won’t receive the Government Contribution unless you joined KiwiSaver before 1 July 2019 AND have been a member for less than 5 years.
An important thing to note here is that if you are still working, it’s likely that you will also not receive the employer contributions. Some employers do continue to pay a 3% contribution, however they are not obliged to.
If you joined KiwiSaver before 1 July 2019 and were aged 60-64 at the time, you will still receive compulsory employer contributions for 5 years, or until you make your first retirement withdrawal.
Can I withdraw all of my KiwiSaver contributions when I turn 65? Should I?
When you turn 65, you can access all of your KiwiSaver funds at any time. Although taking out all of your savings as soon as you’re eligible might seem like an appealing idea, it’s important to know your options.
Withdrawing all of your savings
As it’s your money, you can absolutely use it how you please once you turn 65, but if you do decide to withdraw all of your savings, you’ll need to close your KiwiSaver account and you won’t be able to open another one in future.
Leaving your savings in your KiwiSaver account
There is a common misconception that once you turn 65, you have to withdraw all of your KiwiSaver savings and reinvest them in a term deposit or other savings account. This isn’t true – you can keep your savings in your KiwiSaver account and it’s often a lower cost option compared to other managed funds.
If you’re still working, even just part time, this could be a good option as you’ll still be contributing to your savings. If you are planning on leaving your savings in your KiwiSaver account, it’s a good idea to have a chat with a financial adviser to discuss what fund type options are available for you.
Withdrawing some of your savings
This one’s a good compromise – you can still use your money how you like, but you can also keep some savings tucked away for a rainy day. Some providers can offer you regular automatic withdrawal amounts which might be helpful if you’d like to have a bit of extra cash every week without draining your account.
If you’re not sure about how to manage your KiwiSaver funds once you’ve turned 65, come and have a chat with one of our friendly advisers today.
Make sure you’re in the right fund type
While you’ve been saving for a first home, you might have had your KiwiSaver in a more conservative fund, or you might not even have looked at it at all. Now’s your chance to review just what kind of fund you’re in and how you can make the most of it.
Once you’ve withdrawn your funds for a first home, you likely won’t be able to use your KiwiSaver again until you retire. Because you now have a longer period of time in which to ride the ups and downs, the amount of risk you’re willing to bear might have changed too. It’s a good idea to sit down with an adviser to discuss the various fund types and figure out which is best for you.
Contribute what you can
Now that you have a bigger financial commitment in your mortgage, it could be tempting to take a break from contributing to your KiwiSaver fund altogether. This might seem like a good option now, but could mean you’ll be missing out on so much more come retirement.
Try to contribute as much as you can, particularly while you’re still working and your employer is contributing too. Even if you start at just 3% of your earnings, it’s better than nothing. You’ll also still receive the Government Contribution, which is definitely a bonus! Later on if you advance in your career or you pay off your mortgage, you could look at contributing more.
Re-evaluate your goals
Your goal for the past few years may have been to purchase a home, and now that you’ve done that, it’s a good idea to see what’s next. You might still be young, but saving for your retirement is an important goal that shouldn’t be overlooked.
This is why it’s important to make your retirement a part of your financial plan. Figure out exactly what it would cost to live the kind of retirement life you want, and work backwards to see what you need to save now.
It might seem daunting since you’ve just taken out a big chunk of your retirement savings, but putting a plan in place to keep you on track is the best way forward. You can check out our handy KiwiSaver calculator, or one of our friendly advisers can help you out.
Does it cost to set up KiwiSaver for my child?
KiwiSaver is free for parents to set up for their children, they will just need to be allocated an IRD number. Obviously younger children won’t be making contributions from a salary, so you’ll need to contribute on their behalf to build up their savings.
How do under-18s join KiwiSaver?
If your child is under 16, both parents or guardians must sign the application form on their behalf. If your child is 16 or 17, they must sign the form alongside their parents or guardians.
Note that if your child is under 18 and is in paid employment, they can’t join KiwiSaver through their employer, only through a KiwiSaver provider.
Can I change my child’s KiwiSaver fund and scheme later on?
Absolutely. There are a variety of different fund types and schemes available, and what’s right for them when they are young may not be what’s right for them when they get older. It’s a good idea to teach your children about these different fund types so that when they are able, they can choose for themselves. If you’re not sure yourself about what funds and schemes are available, a Haven adviser can provide you with this information to help you decide.
If my child is working, does their employer contribute too?
If your child is under 18 and in paid employment, their employer isn’t required to contribute to their KiwiSaver account until they turn 18. Some may choose to, but it’s ultimately up to the employer.
Do under-18s receive the Government Contribution?
Unfortunately no, children aged under 18 are not entitled to receive the Government Contribution.
What fees will my child’s KiwiSaver account have?
The fees for your child’s KiwiSaver account will depend entirely on which provider they are with, and what fund they are in. It’s a good idea to do some research on the providers available as some offer fees-free KiwiSaver accounts for under 18s. If your child is not in a fees-free or low fees account and they aren’t contributing much, the fees could eat away at their savings pretty quickly.
If my child is working, can they apply for a Savings Suspension?
If your child is under 18 and in paid employment, they can apply for a Savings Suspension (previously a Contribution Holiday) after they have been contributing to their KiwiSaver account for 12 months.
If you have any other questions about setting up KiwiSaver for your child, don’t hesitate to get in touch with our team. Our advisers are able to provide you with generalised KiwiSaver advice to help you decide what is best for the financial future of your child.
Are you in a fund that best suits your needs?
If you were automatically enrolled in KiwiSaver through your employer and never actively chose which fund to be in, it’s likely you’re in a default scheme which is more conservative and might not grow as much as you’d like come retirement.
It’s important that the KiwiSaver fund you’re in is meeting your needs, namely your appetite for risk and the length of time until you need to withdraw it. If you aren’t sure which fund you’re in, it’s a good idea to take a look.
Check in and make sure you know your options and have made a conscious decision about how you want your KiwiSaver to work for you.
Can you increase your contributions?
If you’re enrolled in KiwiSaver, you’ll be contributing 3%, 4%, 6%, 8%, or 10% from your salary. If you began at the lower end of the scale but have since received a pay rise, you could look at contributing more to boost your KiwiSaver. Even increasing a 3% contribution to 4% might make a healthy difference to your balance over the long run.
Remember, you can also make voluntary lump sum payments into your KiwiSaver to increase your balance. If you’ve had a one-off bonus, or come into some cash from an inheritance or similar, you can allocate a bit more to put towards your KiwiSaver balance.
What fees are you paying?
Because KiwiSaver is an investment, KiwiSaver providers charge different fees for managing your account. If you’re getting great returns you might be happy to pay more in fees, but it’s a good idea to check out what fees you’re paying because there may be a better option out there for you.
If you’re not sure what fees you’re paying, Sorted has a great tool called Fund Finder to help you compare. You will need to know who your KiwiSaver provider is, and what fund type you are in. If you’re not sure about those details, you can find out by calling 0800 KIWISAVER.