How much should I contribute to my KiwiSaver?
The answer depends on what you want out of your KiwiSaver plan and what you can afford to contribute. Small changes in contributions today can make a big difference to your final balance.
How much you contribute depends on your own personal circumstances and objectives. You can contribute 3%, 4%, 6%, 8% or 10% of your salary. Your employer’s contribution is likely to be capped at 3%.
In deciding what you should contribute, you need to strike a balance between what can you afford to contribute and what you want to achieve with your KiwiSaver plan (the income you want in retirement or the size of your first home deposit).
In general, the more you contribute, the more that you will have at the time of retirement or buying your first home. A 35 year old earning $80,000 a year contributing 3% of their income can expect around $640,000 at retirement, which will provide an income of $618 per week (including NZ Super). By contributing 6%, that same person can expect $968,000, providing an income of $771 per week. An extra $46 per week in contributions today (the difference between a 3% and 6% contribution rate) will lead to an expected extra $153 per week in retirement.
See our blog here to get more detail on how much you should contribute to your KiwiSaver account.