Have your circumstances recently changed? It might be a good time to review your KiwiSaver contribution rate.
A change of job or income due to Covid-19 or the sudden realisation you need more savings for retirement might have you thinking about taking a look at your KiwiSaver contribution rate.
If your situation has changed recently, your immediate instinct might be to opt for a higher or lower rate. But before making a change, you should consider how this might impact you both right now and in the future.
Here are 3 ways to make an informed decision about your KiwiSaver contribution rate.
1. Seek advice
Before making any changes, it’s a good idea to talk it over with an expert. Someone like a financial adviser will be able to give you personal advice specific to your circumstances.
Generally speaking it’s important to understand that the higher your deductions, the less take-home pay you will have. But equally, the more you contribute to your KiwiSaver, the larger the sum you are likely to have at retirement.
2. Consider your long-term goal
What's your KiwiSaver goal? Is it to use it for a first home or to support your retirement? Both goals might be years away, but you should consider how a change of contribution rate will affect your timeline.
Your 2020 KiwiSaver annual statement will show you what you are on track to receive by age 65 and is a great place to start.
3. Be aware of your options
You can only change your contribution rate every 3 months, so it is important to know what your options are. You can choose to contribute 3%, 4%, 6%, 8% or 10% from your salary. Your employer will also match your contributions at a rate of 3% or more.
If you do wish to change your contribution rate, you must let your employer know in writing by:
- Completing this KiwiSaver deduction form and sending to your employer, or
- Sending a letter to your employer, indicating your preferred new rate (3%, 4%, 6%, 8% or 10%)
You can also make voluntary contributions as you please towards your KiwiSaver. If you're already with Kiwi Wealth, you can find the details of how to make a payment here.
