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I’m saving for a house, how much should I contribute to Kiwisaver?

If you are planning to purchase your first home, now or in the future, you are likely considering how you can best utilize your KiwiSaver. The way you contribute to your KiwiSaver in the years and months leading up to the purchase can make quite a significant impact on your ability to purchase. As you may be aware, you can choose your contribution amount. When your employer pays you, you can opt for 3%, 4%, 6%, 8%, or 10% to be put straight into your KiwiSaver. Alternatively, you can manually choose how much and when to contribute.

Contributing the maximum amount of 10% may sound like the best option, and yes, it is a great way to lock that money into savings. However, you can run into problems with some purchases as KiwiSaver is only released to you at the settlement date. Some situations require an upfront deposit, such as purchasing at an auction or buying a new build. If some or all of your deposit is in KiwiSaver, your options will be limited.

A key to maximizing KiwiSaver is to match your employer’s contribution. NZ employers must match your contribution up to a minimum of 3%, and some will match you higher at their discretion; if they contribute 3%, you could do the same.  Any additional money you can save can be put into a savings account which is more readily accessible.

Being aware of your investment settings with KiwiSaver is also essential; having it set to growth or aggressive might be great while you have no plan to use it, but if you’re getting close to using it, a market downturn could expose you to the risk of your deposit not being there when you need it.