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How to manage your KiwiSaver during tough times

 

With living costs rising and inflation at a 30-year high, it hasn’t been easy for many people around New Zealand recently. If you’ve been keeping an eye on your KiwiSaver, you might have noticed a bit of a dip in your balance. Instead of taking drastic measures that could impact your retirement, here are a few things to think about before you make a move.

Remember that KiwiSaver is an investment

It can be tempting to switch fund types, decrease your contribution rate, or stop contributing altogether when your balance decreases, but remember that KiwiSaver is an investment, and any changes you make now can affect your retirement down the track. For most people, KiwiSaver is there to be used when they retire so there will likely be many ups and downs before then.

Know your risk profile

Your risk profile is how comfortable you are with different levels of risk or market volatility. If you know you don’t want to take on too much risk, you can align your KiwiSaver fund to suit this. In the same manner, if you know you have a while until you’ll need to access it and you’re fine to ride the waves, you can choose a fund type for that too.

It’s easy to get caught up in the uncertainty and the sometimes ominous-looking market updates, but if you’re going to make changes to your KiwiSaver, make sure you do your research and have realistic expectations.

Don’t lock in your losses

On that note, you might think that switching to a more conservative fund means your KiwiSaver funds will be safer, but this can mean that you’ll likely be locking in your losses and missing out when the market outlook gets brighter again. If you made the decision to be in a certain fund before the market downturn, it will likely still be the right decision for you when things settle down.

Keep contributing if you can

Although many household budgets are feeling the strain right now, it’s important to weigh up the pros and cons of reducing or stopping your KiwiSaver contributions carefully. Any money you keep in your pocket now could mean less when you really need it at retirement.

Plus, every year, the government contributes up to $521 into your KiwiSaver fund if you’ve been contributing regularly over the year. If you stop contributing, you might forget to start again, and you’ll miss out on this great initiative.

Get some support

The balance of your KiwiSaver and whether you should change your fund type might be causing you a lot of undue stress and anxiety. It’s a good idea to chat through your options with an adviser – getting more information can help you feel more in control in deciding how you want to move forward.

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