Listen: Why KiwiSaver could be lulling you into a false sense of security

17 April 2020

Written by Cooking the Books with Frances Cook

Back when the world was normal (Pre-COVID-19), we recorded a podcast with Frances Cook and David Boyle. We talked about the importance of getting your KiwiSaver settings right and the need to have savings for a rainy day.  One month later, the world has changed, but the messages in this podcast still resonate. 

Understanding and thinking harder about KiwiSaver at a young age allows people to make the decisions that will give them the retirements they expect.  The earlier we start planning for our retirement and setting our KiwiSaver up, the better your retirement can be.  These are some things that are missing today, in the podcast we discuss:

  • A contribution rate of 3% will not give anywhere near enough income for a KiwiSaver to be comfortable in retirement.  This will require a significant (and probably unexpected) change in peoples lifestyles when they get to retirement.  But is this the fault of individual people or the default settings that make people believe 3% is enough
  • Most people think that KiwiSaver is a very simple product that does not need to be thought about.  In reality, it is an investment product which requires thought and decisions need to be made
  • We would like to see changes to default contribution rates, the default fund structure and also getting rid of the total remuneration policy used by some employers.  All things that will make KiwiSaver better and more useful for everyday Kiwis. 

Another important topic we talked about is where people need to set up emergency funds and savings for times of need and crisis.  This is an extremely important topic and more relevant now we are heading into recession and financial hardship will grow. 

Fundamentally, all of this comes back to good financial planning - it is always your friend though never more so than in a time of crisis.

Have a listen and let us know what you think.


 

Give your KiwiSaver a checkup

kōura has a set of digital tools that will help you to check your KiwiSaver.  You can answer a few simple questions and we will build you a KiwiSaver plan and let you know what your KiwiSaver is going to give you for your retirement or for your first home. 

We recommend that every single KiwiSaver gives their KiwiSaver a check-up at least every year to make sure that you are going to get what you expect our of your KiwiSaver.

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