The age-old question: Why should I join KiwiSaver?
If you are asking this question, don’t worry, you’re not alone. There are thousands of Kiwis in the same boat as you.
In this blog post, we’re going to answer common questions people have when it comes to deciding whether or not to join KiwiSaver.
We’ll also look at the long-term benefits of joining KiwiSaver versus using a traditional savings account.
Is KiwiSaver Worth It?
KiwiSaver offers a relatively low-risk investment versus other investment options available on the market. Whilst NZ Super provides a modest pension to Kiwis over the age of 65.
KiwiSaver allows you to save even more on top of what you receive from NZ Super.
From a retirement saving perspective, you can think of KiwiSaver as a method for growing a nice retirement nest egg for your post working life.
When KiwiSaver was first launched, the NZ Government offered a guaranteed $1,000 when you sign up to help kick-start your savings. Despite this offer being off the table, there are still many benefits for joining KiwiSaver.
Firstly, one of the many incentives of KiwiSaver is Employer Contributions. If you are employed, your employer has to match your contributions by at least 3%.
The NZ Government will also contribute 50 cents for every dollar that you put into your KiwiSaver account.
Furthermore, you can also use KiwiSaver to help buy your first home.
KiwiSaver Versus a Savings Account: Which Option is Better?
Assuming that you open a high-interest savings account with one of the mainstream banking institutes (ANZ, ASB, BNZ, etc.) you are likely to receive 2.20% combined interest p.a. ANZ has a Serious Saver Account and BNZ has a Rapid Save Account where you have to make small contribution per month to receive the higher interest rate (2.20%).
The two conditions for these saving accounts are that you make a small deposit every month and make no withdrawals. Furthermore, these saving accounts are also heavily taxed.
The employer and government contributions alone make KiwiSaver a more profitable option for people looking for long-term saving options.
KiwiSaver is one of the most lucrative low-risk investment options available for New Zealanders.
KiwiSaver does require a little more management than a traditional bank account but the long-term rewards are worth it.
The bottom line is if you can afford the small deduction from your take-home salary, then KiwiSaver is a very lucrative investment option for Kiwis of all ages and demographics.
I’m Interested in Joining KiwiSaver. Where Do I Start?
Convinced that you want to join KiwiSaver? There a number of KiwiSaver providers and funds available for you to choose from.
We have a KiwiSaver Comparison Tool that will help you choose the right KiwiSaver provider and fund for you.
Compare KiwiSaver Funds at quick glance and get the most out of your KiwiSaver contributions.
There are many KiwiSaver consultants out there who can guide you with the setup and management processes to help you get the most out of your KiwiSaver contributions.
We’ve also created another resource for Five Common KiwiSaver Mistakes. Give it a read and make sure that you aren’t making any of these mistakes.
And if you've already had KiwiSaver sorted, then you can compare mortgage rates with us.