Ah, the holidays.

It’s been called the ‘silly season’, yet I’m not so sure I agree – who couldn’t use some time to decompress, or quality time with family and friends? It’s about rejuvenation, replenishment, reviving the soul – not silly at all.

Unless it’s a holiday that goes on indefinitely, which would make it… retirement!

(I certainly seem to plan a lot more for my short holidays than for that really extended one later in life.)

Speaking of holidays that go on and on, here’s one worth crunching the numbers for: KiwiSaver contribution holidays, when someone takes a break from putting money into their KiwiSaver account. (Here's how it works.) Unfortunately these can typically stretch to five years – the default setting – resulting in huge losses down the line.

The decisions we make today – what’s their true impact for tomorrow?

Much has been made of the 2.4 million of us successfully in KiwiSaver, but so many of us (928,620 at last count) don’t contribute regularly. If you set aside the kids enrolled and self-employed folks who put in their contributions once a year, what’s left are a whole lot of KiwiSaver members on holiday – 84% of these for five long years.

Now a contributions holiday can be the right move for some – circumstances change, and hardship happens. But five years? We need to look hard at what we’re missing out on.

Taking a break from KiwiSaver means we don’t get our employer’s contribution, the government’s contribution, and the compounding returns from the market. If you are 35, earn $50,000 and skip putting money into your growth fund for five years, you’d lose an estimated $77,600 by age 65. And if you’re 25, you could be looking at $136,400 less when you retire. 

I’m sure you’ll agree, these figures are the difference between a good and not-so-good result.

But enough of contribution holidays. Let’s get back to the holidays at hand – enjoy the season!