Your KiwiSaver can be the most crucial financial tool at your disposal to ensure that your future and lifestyle is comfortable, prosperous and happy – however, many people don’t know how to maximise their returns and get the most out of it. Spratt Investment Services present our top tips to get the most success from your KiwiSaver.
CONSIDER WHICH FUND YOU SHOULD BE IN
Many people are in a default conservative KiwiSaver fund despite having many years before retirement. This may not be appropriate and could in fact mean they earn less than they could over the long term. We recommend taking the time to look at your options and where you are and what type of fund returns you the maximum benefit.
CHECK YOUR TAX RATE
KiwiSaver funds are taxed based on your prescribed investor rate (PIR). If you don’t tell your provider which PIR should apply, you will be taxed at the highest level of 28% with no refund at all. If you are unsure about your PIR rate, we can help you find out and ensure that you are not getting your funds unnecessarily tapped by taxes that don’t need to be in place.
GET THE MAXIMUM GOVERNMENT CONTRIBUTION
The government currently provides a tax credit of 50c for each dollar that you contribute to KiwiSaver, up to $521 annually. Put in $1042, and you will receive an additional credit of $521 from the government – this can also be accomplished through you topping up if your personal contribution is too low to receive the full credit throughout the year.
So how does the government Kiwisaver contribution work?
You must be contributing to your Kiwisaver account and be aged 18 or over.
You must not yet eligible for a full retirement withdrawal.
To get the full MTC (member tax credit), you need to contribute at least $1,042.86 by 30th June each year.
Spread over 12 months, that’s only about $20 per week.
TALK TO AN ADVISER
With many KiwiSaver balances becoming quite substantial, there’s no reason not to talk to an adviser about how your KiwiSaver fits into your overall financial plan and how you can continue to make sure you’re getting the best from it.
PROFESSIONAL KIWISAVER ADVICE WHEN YOU NEED IT
The advice presented above is general in nature – for personalised advice you can contact us anytime below to ask any questions or to request a free, no-obligation consultation