With the announcement last month of higher personal contribution rates for Kiwisaver at 6% and 10%, this has increased the potential for individuals to save even more for retirement.
Figures released by Canstar show that a 25-year-old earning $50,000 per year and contributing 10% in a growth fund could have $1.5m saved by retirement.
However, this would be reduced to $753k if the same person started saving 10 years later at age 35 and $342k if savings started at age 45. Even if the 25-year-old only contributed 3%, under the same conditions, they would amass a fund of $796k by retirement.
These figures are based on historical returns and therefore don’t represent guaranteed results, however, the message is clear; the sooner you can start saving, the better for your future retirement fund.
These results were based on a high growth KiwiSaver fund, however, as specialist insurance brokers, we know that higher returns can go hand in hand with higher risk. Therefore your own personal risk appetite needs to be considered when deciding which fund to opt for.
In addition, whilst taking advantage of higher contribution rates will clearly benefit your future retirement fund, the greater financial commitment required needs to be weighed against your current financial obligations, as well as the fact that the money is locked away until retirement.
When in doubt, we would always recommend seeking advice from a qualified financial advisor to ensure that you’re making long-term investment decisions that are right for your circumstances.
At Bonded NZ, as insurance broker specialists, we’re passionate about your future security, which is also tied to the security of your business. Contact us today to discuss how insurance services can manage long-term risk for your business.