KiwiSaver Questions

What Should I Set My KiwiSaver Contributions At?

Written by National Capital
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What Should I Set My KiwiSaver Contributions At?

Setting the contribution rate for your KiwiSaver account is a personal decision that depends on your financial goals, income, and individual circumstances. Here are some general guidelines to consider when determining your KiwiSaver contribution:

Meet the Minimum: Ensure you're contributing the minimum required by law, 3% of your gross salary or wages. Your employer must also contribute at least 3%, so contributing at least 3% is a good standard that everyone should be doing.

Aim higher: While the legal minimum is 3%, many financial experts recommend contributing a higher percentage to accelerate your retirement savings. You can contribute up to 10% of your income if your budget allows.

Read More: Additional KiwiSaver Contributions, Are They A Good Idea?

Consider Matching Employer Contributions: Employers typically contribute at least 3% to your KiwiSaver account, as required by law. However, some employers go above and beyond, offering contributions of 4% or more as part of the benefits package for their employees. It's essential to be aware of your employer's contribution rate and try to match whatever percentage they provide. 

Factor in Government Contributions: To get the maximum government contribution of $521.43, you must contribute at least $1024. If you earn less than $34,762 per year, you won't get the total contribution unless you contribute more than the minimum. So, in this case, you would need to contribute 4% or more of your salary to ensure that you receive the maximum government contribution of $521.43.

Read More: Don't miss out on your 'free' KiwiSaver money!

Assess Your Retirement Goals: It's important to consider what kind of lifestyle you want to have when you retire and how much money you'll need to make it a reality. You might need to contribute more of your income to your KiwiSaver account to achieve your retirement goals. 

Review Periodically: It's a good practice to periodically review your financial situation, particularly when your income or life circumstances change. You can tailor your savings plan based on your current situation and goals. 

Consult a Financial Advisor: It's always a good idea to seek advice from a financial advisor who can give you personalised recommendations based on your unique situation. They can help you create a comprehensive financial plan that includes the best contribution rate for your KiwiSaver.

Remember that the goal is to find a contribution amount that balances your current financial needs with your long-term retirement objectives. Contributing more when possible, especially in the early stages of your career, can significantly impact the growth of your KiwiSaver fund over time.

Read More: How much do I need to contribute?


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