The first-home couple who thought KiwiSaver had done its job

A couple I met recently had just bought their first home. They had used their KiwiSaver for the deposit, which left the $1,000 that has to stay in each account. As far as they were concerned, KiwiSaver had done its job. They had not looked at it for months.

That is one of the most common situations I see, and it is easy to understand. KiwiSaver was the house fund. The house is bought. Job done.

Except their KiwiSaver had just started its second job, and it is a much longer one. They were 32 and 31, with more than 30 years before they could use the money for retirement, and both accounts were still sitting in a balanced fund.

What we looked at

He earns $80,000 a year and she earns $75,000. Both contribute, both employers contribute, and with $1,000 each they were starting again from close to nothing. In our session we projected both accounts to 65 twice: once in the balanced fund they were in, and once in the aggressive fund I recommended for a timeframe that long.

Same people, same salaries, same contributions. The only thing that changes between the two projections is the fund type.

Between them they would put in about $401,000 of their own money by 65, and their employers about $266,000 more after tax. Those contributions are identical in both rows. So the $498,000 is entirely the difference in what the money earns.

Why two percentage points turns into $498,000

Two percentage points a year sounds small. Over 33 years it is not, because growth earns growth. Each year's return is added to the balance, and the next year's return is earned on the larger total. Two funds a couple of points apart are not two numbers close together; they are two curves that keep moving apart for the whole timeframe.

That is also why the starting balance of $1,000 hardly matters here. What matters is that every contribution from now until 65 goes into a fund built for the timeframe. If you want to see the maths step by step, how compound interest works in KiwiSaver walks through it.

Why aggressive was right for them, and not for everyone

An aggressive fund holds mostly shares. In a bad year it can fall a long way, further than a balanced fund, and it can take years to recover. That is a real cost, and some people would rather have a smoother ride and a smaller balance.

For this couple the timeframe does the work. With more than 30 years before they can use the money, there is time for bad years to recover, and the higher expected long-term return has room to compound. If they were saving for a house in two years, or retiring in five, I would be recommending something much more stable, for exactly the same reason.

We also looked at their provider and its fees, because those matter too. But the projection above deliberately changes only the fund type, using the same average returns for both, so the number shows the effect of that one decision.

Just bought a home? Check these five things

• Your fund. Log in to your provider's app and read the fund name. If you moved to a conservative or defensive fund to protect your deposit, that reason has now gone.
• Your timeframe. For most people, the next time they can use their KiwiSaver is 65. Your fund should match that, not the house you have already bought.
• Your contributions. They should still be coming out of your pay. Check your payslip.
• The government contribution. Putting in at least $1,042.86 yourself each July to June year gets the full $260.72, if you meet the conditions. See Inland Revenue on the government contribution.
• Your provider. Fees and how a provider manages money differ, and over 30 years both add up. The KiwiSaver fund directory lets you look up your fund.

The assumptions behind the numbers

This is an illustration based on a real couple, with their names left out. It is not a forecast, and it is not advice for your situation.

• Each contributing 3.5% of salary, rising to 4% from 1 April 2028, with the employer matching. Employer contributions are shown after employer superannuation contribution tax (ESCT).
• Salaries rising 3.5% a year, contributing every year up to 65.
• The government contribution of up to $260.72 a year, until a rising salary passes the $180,000 income limit.
• Returns of 3.5% a year (balanced) and 5.5% a year (aggressive), after fees and after PIE tax, the same every year. Real returns go up and down.
• 2% inflation, used only to show the result in today's money.

Rates and rules are current at November 2026. The full breakdown for each of them is on the real life KiwiSaver examples page, and the method is worked through step by step in two KiwiSaver projections, worked end to end. To try your own numbers, use the KiwiSaver calculator.

Sources and further reading

• Inland Revenue - getting your KiwiSaver for your first home - the withdrawal rules, including the $1,000 that stays in the account.
• Sorted - which KiwiSaver fund suits you - matching a fund type to your timeframe.
• KiwiSaver after your first home - what to do with your KiwiSaver once the house is bought.