Why I’m not maxing out my Kiwisaver and why I’m not worried about it.

*For the rest of the world Kiwisaver = 401K, retirement fund type thing.

I only put the minimum contribution into kiwisaver. A measly 3% of my income.


GASP! – but how will you ever save enough to retire?

Well there’s more to retirement than Kiwsaver and there’s some really good reasons to not put all my savings in there.

  1. Can’t touch it till you’re 65. It’s completely locked down for most people. There’s a couple of exceptions, if you are buying your first home (Doh did that before Kiwisaver was even a thing), if you are terminally ill (holy heck hope it doesn’t happen to me before I’m 65) or if you are in a desperate dire “exhausted all your options” financial meltdown.  None of these are scenarios I’d actually like to be in!  I want to retire early so I’m going to need access to my funds from age 45-50 so I can’t have everything tied up in Kiwisaver. This is the biggest downside to Kiwisaver for me, It just doesn’t work for early retirement.

    Oh Kiwisaver, why you let me down.
  2. Double contributions doesn’t equal double returns.  Another shocker but let me show you an example. Lets take a 25 year old woman earning $45,000 a year. Here are her projected Kiwisaver returns at the different standard contribution rates using the get sorted kiwisaver calculator.

3%     $244,562 – minimum contribution

4%     $284,560

8%     $444,055

As you can see moving from 3% to 4% doesn’t give you a 33% increase in your final figure. Nor does going from 4% to 8% double the return. That’s because of the magic of the employee match at the 3% rate. Currently employers only match the minimum 3% contribution rate. They will contribute monies equal to 3% of your wages to your kiwisaver account. NICE! 100% return straight away, can’t complain about that.

Another reason why returns don’t double is the way the tax rebate works. If you save $1042.86 annually into Kiwisaver you’ll qualify for a tax credit of $521 which will be added to your Kiwisaver account at the end of every financial year. This is a great bonus to my savings but there’s no increased rebate when contributing higher amounts.

So whats the answer?

The solution for me is to put my money into other investments but in a similar automatic way. Automatic payments on payday shift my money into brokerage accounts and savings accounts safely away from my spendy fingers. I contribute monthly to index linked funds (with no buy in costs or brokerage fee and overall low fees) and these are diversified across New Zealand, Australian and International sharemarkets and I can access them as soon as I’m ready to retire.


But I keep the Kiwisaver going because the employer 3% match and tax credits are too good to pass up.

4 thoughts on “Why I’m not maxing out my Kiwisaver and why I’m not worried about it.”

  1. I am thinking the same thing since I plan to retire early too! Also, I like the word “kiwisaver” more than 401k! Kiwisaver sounds like a cool toy but 401k is just lame.


  2. Gotta love the Kiwi’s ;), you guys are awesome! 🙂
    Okay back on topic, yep completely agree with you there.. Certainly not putting extra into my super as I plan on finishing up / “retiring” early too

  3. Do you think it’s worth contributing to kiwisaver if you’re unemployed? I’m a stay-at-home mum so one income household. I’d only get the member tax credits but is it worth investing the $1000- something a year to get it or better to invest it elsewhere (we have property and are getting into shares).

Leave a Reply

Your email address will not be published. Required fields are marked *