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What if NZ Super and KiwiSaver aren't enough for life after 65??

September 11, 2019


Written by Contributor

A smart way to bridge the income gap between NZ Super and KiwiSaver. 

How will you get by when you retire? 

Will your KiwiSaver investment be enough, along with NZ Super? Or will you need to find other ways to boost your income? 

If you’re not sure whether you’re on track, now’s the time to decide whether you need another source of money to supplement your KiwiSaver investment and NZ Super. 

Managed funds could be a good choice to help you on the path to retirement. Most offer flexibility, accessibility and the chance to make higher returns than savings accounts or term deposits

Kiwi Wealth’s managed funds pool investors’ money in different asset types, such as shares, cash, bonds and property. 

Check out these 4 reasons to invest in Kiwi Wealth’s managed funds for your retirement:

You can’t count on NZ Super

At current rates, NZ Super is $21,380 each year ($411 per week) for single people living alone, and $32,892 ($633) for couples. 

We’re one of only a few countries to provide a universal pension, without means testing, to people from the age of 65 till they die.

But there are no guarantees NZ Super will be around in its current form when you hit 65.

With New Zealand estimated to have around 1.2 million Kiwis aged over 65 within 10 years, outgoing Retirement Commissioner Diane Maxwell says raising the age of eligibility is “a no-brainer”. 

Retirement lasts longer than it used to

On average, 80% of 65-year-old women in New Zealand can expect to live to 94, and men to 90. That means you may need to find enough income to fund 30 more years. 

If you decide to supplement your income or set up a separate fund for holidays or medical expenses, you could consider a term deposit. 

But while term deposits are popular with savers who want to lock away their money and earn fixed returns, they can earn relatively low interest rates. 

Managed funds have more potential to give you higher returns, depending on the level of risk you’re comfortable with. 

You’ll have more flexibility

While you can’t access your KiwiSaver funds till you’re 65, with Kiwi Wealth managed funds you can withdraw money when you need to. 

You can open an account with Kiwi Wealth Managed Funds for as little as $500, and make regular contributions from just $50. 

You’ll also be able to choose a fund that best suits your retirement goals and attitude to risk.

You may want to keep working

KiwiSaver is still a relatively young scheme, and may not give you the returns you need by the time you’re ready to retire. 

If you have $20,000 in your KiwiSaver account at 65, and don’t add to it, you could withdraw an extra $24 per week for the next 20 years (assuming a real rate of return of 2%). 

So you may choose to boost your income by continuing to work, either part-time or full-time. Nearly one in four people aged 65 plus are in paid employment, and that number is expected to keep rising.

When you decide to stop work, you’re likely to have a more comfortable retirement if you’ve opened an account with a managed fund early and continue to contribute to it throughout your working life.

For more helpful info on investing – including online tools to help you work out how much you’ll need for retirement – see our Investor 101 resource centre. 

Tags: Investing, KiwiSaver, Retirement, Managed Funds

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