If KiwiSaver downed an energy drink, here's how much higher it could jump: $462,000.

That's how much difference it could make to someone over their KiwiSaver experience if they adjust their settings to get the most out of it. Specifically, three power-ups.

$462,000! That's one heck of a lot of money. (And yes, it's been adjusted for inflation.) The reason why it's so surprising is that we all tend to undervalue how much time is on our side, and how much we can grow financially in the years to come.

Take someone who has an average salary of $60,000 over their entire career of 47 years, from age 18 to 65. Leaving it as is, rolling sleepily along, they'd end up with close to $215,000 in their KiwiSaver. They'd put in $58,000, their employer $47,000, government $10,000, and they'd earn close to $100,000 from that money being invested by their fund manager.

But let's see how much better those results could be.

Power-up #1: Lift your KiwiSaver contribution rate.

Increasing how much you put into KiwiSaver from 3 per cent to 8 per cent could give you $197,000 more. Many of us can manage this extra amount from each pay and not miss it, but who wouldn't miss that better result at the end? 

How to do this: contact your employer to raise your rate.

Power-up #2: Pick the right KiwiSaver fund for you.

Switching from a conservative to a growth fund could give you $133,000 more. Yet so many of us have not actively chosen which fund to be in. 

How to do this: use the Sorted KiwiSaver fund finder.

Power-up #3: Make sure your tax rate is correct.

You may be being taxed more than required. Correcting your prescribed investor rate (PIR) from 28 per cent to 17.5 per cent could give you $26,000 more.

How to do this: check your PIR with your KiwiSaver provider.

So those are the top three ways to power up your KiwiSaver. But here's the thing: when combined, they compound up even higher over time. Because more money is flowing in due to increased contributions and lower taxes, it then has the potential to grow even more because it's invested in growth assets like shares and commercial property.

By age 65, our $60,000-a-year average employee's results could climb to $677,000 instead of that $215,000. (That's the $462,000 difference I mentioned.) They'd have put in $153,000, their employer $48,000, the government $10,000, and could have $466,000 in returns from their money being invested.

Since there will be hundreds of thousands of people who have not taken advantage of these three power-ups, we all need to spread the word: get the most out of KiwiSaver. Give yours some wings.

Comments (3)

Gravatar for Tom


10:14am | 30 Nov 2016

Hi Sel, Kay, thank you both for your comments. The $60,000 figure is an average for someone over their whole career, so in this case that would mean starting around $42,000 a year. Hopefully this is a bit more realistic to you. The other thing you should know is that there are some key things you can still do to dial up your KiwiSaver results, even if you can't find room to raise your contribution rates. One thing you can do is pick the right fund for you, particularly one that doesn't charge high fees. You don't want your hard-earned savings just paying fees. That's where the KiwiSaver fund finder comes in (http://fundfinder.sorted.org.nz/), as it lets you sort through funds by important criteria like fees. Also, the third point here about checking your tax rate also will be important for you (as you don't want to be paying more tax than your due). Finally, you can make sure you're getting the full government contribution to your KiwiSaver, up to $521 every year. Here's where to learn more about that: https://www.sorted.org.nz/home/mtc-campaign/. So even if you are on a low income, there are still ways to get the most out of KiwiSaver. And I would say that these will make even more difference to you than others. All the best!

Gravatar for Sel


8:27am | 9 Nov 2016

I agree with Kay. I earn nowhere near $60K and contributing 3% is a struggle as it is on a lower income bracket, especially when there are set living expenses that is critical or more urgent. The cost of living rises everyday but the minimum wage stays the same. There is a hige gap between those who can afford to take part in Kiwi Saver and those who cannot, so what is the solution for those of us who cannot afford to do as your article says, how do we make our Kiwi Saver's grow, because I don't see anyone not wanting to get more out of their Kiwi Saver, but how do they do it is the question?

Gravatar for Kay


4:25pm | 8 Nov 2016

My average salary is much lower than $60K. There may be thousands of people underinvesting. Given that more than 40% of the NZ workforce is on or near the minimum wage, there are many thousands of people who cannot contribute much to KiwiSaver, and some can't join at all. Classic rich vs poor divide.