FREE MONEY! Have you contributed enough to your KiwiSaver?
06 Jun, 2021
In my email I wrote last week to all of the fabulous people who subscribe to my blog, a decent number of people got in touch to thank me for the prompt I gave them to look at their own KiwiSaver before the 30th of June. If you would like to sign up to my email list you can do so HERE.
I was particularly gratified with this message:
“This is probably the most effectively communicated reminder to make sure you're eligible for the Gov contribution for KiwiSaver I've ever seen. Well done on making that so easy to understand!” DW
So I thought I would do a quick blog post this week, using my own KiwiSaver statement as an example to show everyone who reads my blog how you can make sure you have contributed enough to your own KiwiSaver by the end of June to get the full government contribution of $521.43.
If you are working full time in a PAYE job and have elected to contribute a portion of your wages to your KiwiSaver scheme then chances are you will be absolutely fine and have contributed more than enough. The only thing left for you to do is check that you are in the right fund for you: Low fee and appropriate for your risk profile. If you are in a default fund then it’s time to get your head out of the sand and actually go and make an active decision about your financial future! The Sorted KiwiSaver Fund Finder is a great tool to help you find an appropriate fund: Check your current fund
For the rest of you…
If you are under the age of 18 you will not receive the government contribution BUT don’t let this put you off joining and contributing to your own KiwiSaver from as young as possible. You may have a part-time job and an employer that contributes or you might just elect to send a percentage of your paycheque to your KiwiSaver even though your employer and the government don’t yet contribute. This is a good investing habit to get into and the money you invest will be growing for you, this is a brilliant start to your investing life so please don’t let anyone tell you that KiwiSaver is not worth it for juniors. I signed my own daughter up when she was born and have contributed $40 each month ever since.
If you are:
Self-employed
Working part-time
Have had time away from your work
Then you need to log into your KiwiSaver and make sure that you have contributed a minimum of $1,042.86 by the end of June to receive the government contribution of $521.43.
The main point of this quick blog post is to make it clear that this figure doesn’t include the money your employer puts in, nor past government contributions nor money moved from an Aussie scheme. It’s your contributions from either your wages or from your voluntary contributions.
This is my own KiwiSaver account, I am in a Simplicity Growth Fund (this is absolutely not a paid post, I (unfortunately) receive nothing from mentioning this provider!):
“Your Contributions” is made up of both my Employee and Voluntary Contributions. If I go into “Transactions” I can set the date range for the KiwiSaver calendar year of 01/07/2020 - 30/06/2021 and drill down into both my Employee Contributions and Voluntary Contributions (see below) and then I can add up to find the total figure, making sure that it’s over that magic number of $1,042.86. In my case, it is, with a few weeks still to go I’ve contributed $1,078.12 so I’m all set and don’t need to do anything else!
I don’t need to apply for the government contribution of $521.43, it’s just automatic and will come into my account in a few months time.
I only work about 14 hours a week in a PAYE job and I earn $24 an hour before tax, so my weekly contribution from my wages is very small, hence me needing to keep an eye on things. I am also self-employed by my side hustle, this blog!
I also have an automatic monthly voluntary contribution of $50 going from my own bank account to my KiwiSaver account. This, combined with my Employee Contributions will get me over the figure of $1,042.86 each year, making sure I’m then eligible for the full $521. Jonny is fully self-employed, so he also has a monthly $100 contribution going to his KiwiSaver account, which gives him a total annual contribution of $1,200, so he is all set too.
Out of interest, you will see a Fees tab there, I paid a total fee of $276.72. How does that compare with your own KiwiSaver provider? Go and check because fees matter a lot and will erode the return of your fund over time.
If you fail to get over the threshold, you will be paid on a pro-rata basis, so it’s not ‘all or nothing’ and if you simply could not contribute the full amount due to financial reasons, then you will still get something but I’d really encourage you to find the extra money to top it up if you possibly can.
One final note. Both Jonny and I only contribute the minimum amount to our KiwiSavers not because we think it’s a poor investment (it’s an excellent investment) but because we also invest in other investments outside of KiwiSaver, something you will see me regularly blog about. As a general rule, in total, we invest anywhere from 30%-40% of our monthly combined income. Because we intend to retire well before the age of 65 it’s important for us to have access to our money to live on once we stop working and putting all of our money into KiwiSaver would prevent us doing that.
Take action!
Please log in to your own account today and make sure you have contributed enough to get the full whack from Jacinda A. Don’t leave free money on the table. This is what $521.50 looks like.
If it were laying on the ground would you stop and pick it up? Of course you would!
Final thoughts…
My final thoughts are relatively blunt and meant for those who are not in KiwiSaver because they think that it’s some weird plot by the government and they hate the thought of not being able to access it until the age of 65. You are misguided, KiwiSaver is YOUR money and it will be available to you when you reach 65. If you are self-employed I’m sure you can spare just $20 a week to make a voluntary contribution to a fund. If you are a PAYE employee then you are turning down the money that your employer will give you for free and all you need to do is push a small percentage of your own pay into your KiwiSaver fund instead of into your paycheque to get it. It’s still YOUR money OK?
Looking at my own balance above, I have worked part-time and sometimes not at all for the last 13 years yet I’ve accumulated $92,790. My contributions, though smaller than most, get added to my employer contributions and the annual government contributions. All I need to do is contribute regularly over time and pay little attention and it sure is nice watching my returns compound as the years roll on by.
My retirement is looking a whole lot better knowing that I’ve got this (and more to come) waiting for me when I get to the age of 65.
If you are not yet in KiwiSaver, what the hell are you waiting for?
