KiwiSaver is the first step towards planning for your retirement. Is it the only step? No, but it will certainly help you have a more enjoyable retirement.
For self-employed people, you do not get the “employer” contribution, however you should still put in at least $1040 to get the maximum government contribution. This can be weekly, monthly or yearly – to suit your cashflow. Remember, if you do pay yourself via PAYE, then you will need to contribute as both an employer and employee.
Let’s say you have 10 years until retirement You contribute $1040 each year and the Government puts in $520 each year. Is $15,000 plus the investment gains really going to help in retirement? No, but as mentioned it is the first step – there is no other “legal” investment that will give you a 50% return before it is even invested. Secondly, everyone is getting the Government contribution, should you?
What if I want to contribute more? You could look at a “non-locked” investment and putting any additional savings into that.
KiwiSaver locks your money up until retirement. You do not get the choice of early retirement withdrawal. As you are self-employed, we all know that the unexpectant can happen – would it not be handy if you have the option to access some of your retirement savings before retirement?
How much do I need to save for retirement? Whilst some suggest that you save 10% of your earnings, given that you are likely to have a more complex situation – possible business to sell, it is worth having a discussion so that you can plan for the retirement you would like.
When is the best time to start planning? The best time was yesterday, the second-best time is right now.
To ensure that your retirement planning is under control, feel free to contact Stephen on [email protected] or 021 710 301.
Stephen is an Authorised Financial Adviser. His disclosure statement is available free of charge by emailing [email protected]. This is not intended to be personalised advice however generalised information.