So you want to... prepare for retirement?

Last updated 11 January 2024

Retirement might seem far away when you’re in your 20s or 30s, but the financial choices we make when we're young can have a big impact on our future. And while some people choose to continue working past retirement age, it would still be nice to have the option to kick back on a cruise around the Pacific Islands when the time comes. 

Some early retirement planning could affect when and how you retire, so find out more about how to prepare for retirement. 

1. Your KiwiSaver scheme fund matters

Your KiwiSaver scheme fund has two key aims: saving towards your retirement, or saving towards your first home deposit. The type of fund you choose will depend on things like your financial goals and how much risk you're comfortable with.

For example, if you're planning on using KiwiSaver to help you buy your first home soon, you'll probably want to be in a more conservative fund to keep your deposit safe from the potential volatility of more aggressive funds. 

But if you aren't planning on accessing your KiwiSaver account within the next 10 years or so, you can probably handle a few ups and downs in the market. In this situation, selecting a more aggressive fund is likely to put you in a better financial position over the long term.

It's worth remembering that if you do make a first home withdrawal, your KiwiSaver account balance will drop to almost zero. Then you'll be starting from scratch again, saving for your new goal: retirement. You might also choose a different strategy at this point, like opting into a growth or aggressive fund to grow your savings faster over the next decade or two. 

It's wise to review what type of KiwiSaver scheme fund you're in whenever your goals or circumstances change, to make sure it's still working for you.

2. Responsible investing for your retirement

If you wouldn't personally choose to invest in tobacco or fossil fuels, you might not be thrilled to discover that your KiwiSaver scheme provider could be investing in these industries on your behalf. 

The MAS KiwiSaver Scheme and MAS Retirement Savings Scheme both follow a responsible investment mandate, which means we invest in companies with green revenues and will not invest in companies with principal business activities involved in fossil fuels, weapons, or tobacco.  

All eligible MAS KiwiSaver Scheme and Retirement Savings Scheme funds* have been certified by the Responsible Investment Association of Australasia and awarded 'Mindful Fund' status by Mindful Money, an independent charity that helps Kiwis find investment and KiwiSaver scheme funds that align with their values. MAS was also named a finalist for 'Best Ethical KiwiSaver Fund Provider' at the Mindful Money Ethical Investment Awards in 2022 and 2023, recognising our commitment to help our Members achieve healthier returns. 

3. How much should I be contributing to my KiwiSaver account?

You can choose to contribute 3%, 4%, 6%, 8%, or 10% of your salary to your KiwiSaver account, and in most cases your employer will contribute 3% on top of that. You can easily change your KiwiSaver contribution rate by notifying your employer.

If you have other financial commitments, you may only be willing to contribute 3% or 4% into your KiwiSaver account. But if you finish paying off debt or get a rise, you could consider increasing your contribution rate to help your KiwiSaver account balance grow. Even contributing an extra 1% could make those dreams of a cruisy retirement more realistic.

4. Know your KiwiSaver default fund

When you first join KiwiSaver, you can choose your provider and what kind of fund you want to invest in. Otherwise, you'll be placed into a "default fund" with a default provider. Default funds are balanced funds, which offer a moderate risk and return profile, which may or may not be suitable for your risk appetite or investment timeframe. 

As a result, remaining in a default fund might not lead to the best outcome for you, so try to understand your risk profile or talk with your MAS adviser about aligning your financial goals with your choice of fund.

5. Alternative retirement schemes

Some workplaces offer alternative retirement savings schemes that could be more suited to you than KiwiSaver. Some of these schemes let you access your savings early – say, at age 55 instead of 65 – or they may match your contributions at a higher rate than the standard 3%.

MAS offers an alternative retirement scheme for Members, which allows certain Members to withdraw their savings from age 55 – have a chat with your MAS adviser to see if this is a good option for you.