Based on ANZ’s estimated average spend per week as a single retiree ($754), and life expectancy (87 for women, 84 for men), the gap between what you’ve saved and what you need to live a comfortable life can be as much as $560,000! Let’s go with the female life expectancy here, and see what can happen.
Let’s check out which knobs can we adjust to make up this distance between minimal returns and maximum returns from KiwiSaver.
Change your KiwiSaver fund
There are 6 different KiwiSaver funds that you can choose from; Cash Fund, Balanced Fund, Conservative Fund, Balanced Growth Fund, Conservative Balanced Fund, and Growth Fund. If we change from the Conservative Fund to the Growth Fund, we may achieve a much more substantial return.
In this case, applying a Growth Fund to our increased personal contribution level gives us a whopping $395,000 – taking our savings to $768,000!
Remember to consider carefully before entering a growth fund, as these are more financially risky than other funds.
Check your Prescribed Investor Rate (PIR)
Are you getting taxed at the right rate? For many situations, you’ll automatically be taxed at a rate of 28% – the highest rate of taxation. For people earning $48,0001 to $70,000 of taxable income, like our example, you should be getting taxed at the 17.5% rate.
If you’re being taxed at a higher rate than you are supposed to, then switching it can help to free up funds.
By making just a few adjustments in KiwiSaver – sacrificing a little on our end, taking on a bit more risk, and checking our paperwork – we can boost our super so that we’re able to lead a comfortable retirement, with more freedom from financial stress. No matter what age you are, you can always benefit from making adjustments to KiwiSaver, to help you get those strong returns.