KiwiSaver After Your First Home

In this example, we show someone who has just bought their first home.

 

They’re 30 years old, plan to stop work at 65, and we run the projection through to age 90, which is standard for these types of models.

 

They have $1,000 left in KiwiSaver — everything else went into the house.

 

Their salary is $60,000, which is about $1,154 per week before tax.

 

Their KiwiSaver contribution rate is 3.5%. That works out to roughly $40 per week.

 

After buying their home, we place them into an aggressive fund. Given the long time frame until retirement, that would generally be the most appropriate option.

 

Typically employee contributions increase over time as income rises. We include employer contributions, government contributions, tax on returns, and market-average returns based on the last 10 years across all KiwiSaver providers.

 

These are not the returns of any specific provider - they’re deliberately middle-of-the-road assumptions.

 

We also inflation-adjust the figures at 2% per year, which makes a significant difference over time.

 

At 65, under these assumptions, this person’s KiwiSaver balance could be around $992,000 in nominal terms — nearly a million dollars.

 

But once we adjust for inflation, that’s about $496,000 in today’s money. That shows the real impact inflation has over 35 years, and why it’s so important to keep your investments growing ahead of inflation.

 

Now let’s tweak one thing.

 

Instead of contributing 3.5%, this person decides to increase their contribution to 6%.

 

That takes their weekly contribution from about $40 to roughly $69 — an extra $29 per week.

 

What impact does that make?

 

At retirement, their balance increases to about 1.28 million dollars, or roughly $640,000 in today’s dollars. That extra $29 per week results in around $144,000 more in today’s money at age 65.

 

That’s a meaningful difference.

 

Now let’s look at another scenario.

 

Instead of restarting KiwiSaver at 30, this person decides to do nothing for five years. They think, “What’s the rush? I’ve got plenty of time.”

 

So contributions don’t restart until age 35.

 

By then, their balance has grown slightly to about $1,500, and their income has increased to around $65,000. They contribute at 4% which will be the minimum after April 2028.

 

At age 65, their KiwiSaver balance is now around $712,000, or about $393,000 in today’s money.

 

That five-year delay costs them almost $100,000 in today's money!

 

This clearly shows how important it is to restart KiwiSaver contributions as early as possible, give your money time to grow, and let compounding do the heavy lifting.

 

KiwiSaver’s long-term structure works in your favour here.