There are a number of issues to consider when investing for retirement, taking note of these three simple tips should help keep you on track. 

1. KiwiSaver is only the start

Minimum KiwiSaver salary contributions are small, only 3% from your salary and 3% from your employer. If this is your only retirement savings, it may not be enough.  

If you’re able to contribute a little bit more to your KiwiSaver account or make additional investments through non-KiwiSaver investment funds, your extra contributions should grow and compound over time, eventually producing more income for you during retirement. For example, an extra $1,000 invested annually over 20 years earning net 8% p.a. would give you over $45,000 extra. Extend this out over 30 years, and you’d have over $110,000 extra.

Our KiwiSaver Retirement Planner tool found here allows you to estimate the difference contributing a little more each year can make to your own KiwiSaver account.

2. Choose the right fund type

Growth funds should outperform conservative funds over long time periods (e.g. 10+ years). This is because growth funds invest more in growth assets such as shares and property, whereas conservative funds invest more in income assets such as bonds and cash, and over time, growth assets tend to produce higher returns than income assets.

The trade-off for higher expected growth is that growth funds generally have more ups and downs than conservative funds. If you have a long time until retirement (10+ years) being in a growth fund should yield better results than a conservative fund. Risk Profile Questionnaires, such as ours found here, can give a sense what fund might suit you based on your stage of life and your personal tolerance for risk. These tools are not a replacement for financial advice, but serve as a good starting point in choosing the right type of fund.

3. Don’t underestimate your future costs

As prices rise over time your dollars purchase less of a good or service – a process known as inflation.

Over the past 30 years NZ inflation has slowly reduced the purchasing power of a dollar by 2.6% p.a. This means (on average) back in 1986 something that cost you $1 will cost you $2 today.[1] In other words, over the period inflation quietly cut the purchasing power of $1 in half.

If inflation continues at this pace, 30 years from now you will actually need more than twice the amount of money you currently have just to maintain your current purchasing power. This means it can be very easy to underestimate how much you will actually need in retirement.

Our KiwiSaver Retirement Planner tool found here helps project an estimate of what your account could look like both before and after the effects of inflation.

Investing your excess savings and earning returns above the inflation rate year after year is the best way to neutralise inflation’s bite and ensure the real value of your money is growing over time, not shrinking.

Following these three simple steps should put you in a much better position to enjoy a more rewarding retirement.  

To learn about Milford’s award-winning KiwiSaver Plan and how it may be able to help you, simply click here

Disclaimer: This is intended to provide general information only. It does not take into account your investment needs or personal circumstances and so is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser.

[1] RBNZ inflation calculator,