Five KiwiSaver Mistakes That Cost Kiwis Thousands

KiwiSaver is one of the most powerful long-term investments available in New Zealand - yet I see the same mistakes cropping up again and again. Not because people don’t care, but because KiwiSaver can feel confusing, distant, or easy to ignore. Learn more about wrong fund.

Most of these mistakes aren’t dramatic. They’re quiet. And because they compound over time, they can end up costing tens (or even hundreds) of thousands of dollars without anyone noticing until much later… when it’s too late.

Here are the most common KiwiSaver mistakes I see - and what actually helps.

Staying in the Default Fund for Too Long Is One of the Most Common KiwiSaver Mistakes

This is easily the most common issue.

Default funds are designed to be low risk and quite conservative, which makes sense as a temporary holding place. The problem is that many people stay there for years - sometimes decades.

If someone is young or has a long runway until retirement, sitting in a conservative KiwiSaver fund can seriously limit growth. KiwiSaver money is invested, and conservative investments are designed to protect capital, not grow it aggressively.

Default isn’t wrong - it’s just rarely optimal long term. If you think you might still be in one, our default KiwiSaver funds guide explains how to check and what to do next.

Being in the Wrong Fund for the Timeframe

Another big one is fund choice that doesn’t match real-life plans.

I often meet people who:

• Are planning to buy a home soon but are still in growth KiwiSaver funds

• Are decades from retirement but sitting in conservative options

  
  

KiwiSaver investments should reflectwhen the money is likely to be needed, not just age. A mismatch here can mean unnecessary risk - or missed opportunity.

Underestimating KiwiSaver Contributions

Many Kiwis stick with the minimum KiwiSaver contributions and never revisit them. While that’s better than nothing, small increases can make a meaningful difference over time.

Because KiwiSaver contributions are consistent and long term, even a 1% increase can significantly improve outcomes - especially when combined with an appropriate investment strategy.

This is one of the easiest changes people can make.

Ignoring Fees and Long-Term Performance

Fees matter more than many people realise.

Over decades, even small fee differences can quietly eat into returns. That doesn’t mean the cheapest KiwiSaver fund is always the best option - but fees should make sense relative to performance and investment approach.

This is particularly important in the New Zealand investment landscape, where fund structures and styles vary widely.

Treating KiwiSaver as “Set and Forget”

KiwiSaver isn’t a savings account - it’s a long-term investment tool.

Life changes:

• Jobs change

• Income changes

• Goals change

  
  

KiwiSaver accounts and fund choices should evolve over time. A simple annual check-in can prevent years of misalignment.

A Better Way Forward

Avoiding these mistakes doesn’t require constant monitoring or expert-level knowledge. It simply means:

• Understanding how KiwiSaver money is invested

• Knowing why a particular KiwiSaver fund has been chosen

• Making sure KiwiSaver contributions still make sense

  
  

Small tweaks, made at the right time, can have a big long-term impact.

Simple steps. Solid Results.

Sources and further reading

Primary New Zealand sources for the rules referred to above. Rules change, so check the current position before acting:

• Inland Revenue - employee contributions - the contribution rates you can choose from.

• Inland Revenue - KiwiSaver benefits - employer and government contributions, and who is eligible.

• Sorted KiwiSaver fund finder - independent comparison of fund types, fees and services.

• Financial Markets Authority - investors - guidance on fees, value for money and investing behaviour.