Three KiwiSaver myths that could be holding you back
“A few dollars won’t make a difference.”
“It’s not the right time.”
“I’ll get onto it later.”
Sound familiar?
It’s easy to put off making extra contributions to your KiwiSaver. You might feel the amount you can afford is too small or that now isn’t the right time to start.
But these common assumptions could be holding you back from taking simple steps that may make a difference over time. Let’s take a closer look at three of them.
Myth 1: A few dollars won't make a difference
It’s easy to assume that making a small contribution won’t have much impact. But when you contribute regularly and give your money time to grow, it can add up.
Take someone who contributes $100 a month from age 20 into a growth fund. Over 45 years, they would contribute $54,000 of their own money.
Using a hypothetical annualised return of 4.5% after fees and tax, and factoring in the annual Government Contribution, their balance could reach approximately $140,000 by age 65. *
Over time, you have the potential to earn returns not only on the money you contribute, but also on the returns already earned. Regular contributions, given time to grow, can make a difference.
Myth 2: It's better to wait for the right time
When markets are moving up and down, it can be tempting to wait until things feel more certain before contributing. The challenge is that no one knows exactly what markets will do next.
Regular contributions can take some of that pressure away. When you contribute the same amount regularly, your money will generally buy more when prices are lower and less when prices are higher. This approach is known as dollar-cost averaging.
It doesn’t remove the risks that come with investing, but it tends to bring down the average cost of the units you buy and means you don’t need to decide whether each day is the right day to contribute.
Rather than waiting for the perfect time, you could focus on contributing regularly when you can.
Myth 3: You'll notice every extra contribution
Making extra contributions can feel difficult, particularly when your budget is already stretched.
Setting up an automatic payment can make it easier. Once the contribution becomes part of your usual routine, you don’t need to decide each week or month whether to make it.
The key is choosing an amount that works for your budget. You can always review it if your circumstances change.
Automating your contributions can help turn something you intend to do into a regular habit that works quietly in the background.
See what small change could mean for you
Try our KiwiSaver calculator to see how different contribution amounts could affect your KiwiSaver balance over time.
Talk to us
If you’ve got questions about your KiwiSaver account or would like help understanding your contribution options and what may suit your goals and circumstances, our friendly team are here to help. You can drop us an email, call us on 0508 347 437, or chat with us online.