As you all know from, 1 July 2007 all new employees aged between 18 and 65 will be automatically enrolled in KiwiSaver.
It's best to make an informed decision. But where.. websites, phone calls, email???
There are so many different opinions, who are we supposed to listen to?
Well, I've taken this as an opportunity to collate some of the available information.
www.consumer.org.nz gives the best English in explaining about KiwiSaver.
www.Sorted.org.nz gives you an easy to use calculator to see just how much you can get.
www.kiwisaver.govt.nz finally gives you added info, yet tends to favour towards the scheme.
My Observations are, its easiest to decide depending on you age. There are three categories the elderly young and average.
Elderly Persons.
You Should take this scheme, its suggested there may not be enough time to invest money elsewhere to get a higher return.
The Young.
1. Starting with this scheme early means a higher return, *bonus* and if you are planning to purchase a house, this will give you an advantage.
2. Because you have more time to invest your 4% in different schemes, for example for my income, KiwiSaver can give me a large return of around $250,000 after 42 years or so, however, if I were to spread my money out through different savings and investment schemes, after 42 years of that I have an extra 100,000 or more, and growing beyond that time.
Average Persons.
A very large amount of these people already own a house and if you are still paying off a mortgage, it makes more sense to pay that off first. Then use that asset for there retirement.
If your a couple planning to grow old together, and happy with what you already own (asset wise), take KiwiSaver so you can both go for a cruse around the world when you retire.
If no house and no savings, and you are over 30 years old, take KiwiSaver, it could just be that is the only way you are going to be able to save for your retirement.
Conclusion: What I will do.
I am planning to purchase my first house next year, so the incentive of $1000 of the price it bonus for me.
But I also plan on purchasing several more.
I will take 4% KiwiSaver from 1st April 2008 when the employer contributions start. I will also save a seperate 4% in a higher risk investment scheme.
By My calculations; Investments or high interest savings like RaboPlus, calculate an extra $100,000 above the Kiwisaver scheme, but by taking both 4% with Kiwisaver and 4% with an investment company, here is a comparison of the two best solutions for me.
KiwiSaver 4% $252000
RaboPlus 4% $352000
Total after 42 years $604,000
KiwiSaver 8% Total after 42 years: $353,000
What would you choose?
