Plan for the future

Everyone’s plans and needs are different. None of us have a crystal ball to predict the future. You don’t have to map out exactly how much money you'll need. But a financial nest egg can help future you feel more secure. It’ll help you manage the unexpected and live comfortably, whatever that means for you and your whānau.

If you’re already saving for your future, you’re one step ahead. Your money can earn money over time.

If you haven’t joined KiwiSaver, the best time to join is right about now – if you’re eligible and can afford to make contributions (remembering these will be locked until you’re 65 or ready to buy your first home). 

If you can’t afford to put money into some form of long-term savings now, make a date in six months or a year to reassess your situation. 

Future you will thank you – a dollar invested today has the potential to grow, thanks to time and interest or investment returns.

Contributing to your KiwiSaver savings can get you extra money from the Government – and your employer if you have one. If you’re an employee making KiwiSaver contributions from your pay, your employer usually contributes at least 3%.

If you’re eligible, the Government will contribute 50 cents for every dollar you contribute to your KiwiSaver account, up to a maximum of $521.43 each year. This is paid directly into your KiwiSaver account. For example, an eligible person putting about $87 monthly into their KiwiSaver account ($1,042.86 a year) can get the full Government contribution.

If you’re offered an investment opportunity that seems too good to be true, it probably is. 

Investment scams aim to trick you into investing in a fake business opportunity or financial product. Scammers usually promise high or fast returns, low risk, and exclusive insider information.

When do you need money for a big goal like a dream holiday or retirement? This can be a good guide to whether you choose a savings option with a shorter fixed term or one that’s locked in, such as KiwiSaver.

As your life changes, remember to reflect on your savings goals and time before you’ll need the money.

Whether you’re saving for a big goal or investing for the first time, it’s important to consider:

• How much time until you start using that nest egg 
• The savings or investment options that meet your situation and goals.

With savings accounts, term deposits and PIE funds, your money grows thanks to compound interest. 

Investing in KiwiSaver or an investment fund is a way to build your wealth over time. They’re riskier than savings accounts, term deposits and PIE funds, as the balance can go up and down. But both have the potential to grow your money more over the long term, thanks to time and compound returns.

In short, earning interest on your interest, or earning returns on your returns.

Compound interest means you’re paid interest on both:

• Money you put in a savings account or term deposit
• The interest that money already earned.

Compound returns apply to investments, e.g. KiwiSaver and investment funds, which earn returns on assets like shares and bonds. Your returns are reinvested so you’ll earn returns on both:

• Money you put into your investment – for KiwiSaver, this includes any contributions from your employer and the Government
• The returns your investment already earned.

Compound interest and returns add up over time and can potentially make a big difference to your financial future. 

Disclaimer: graph is for the purpose of illustrating the concept of compounding returns only, and does not account for inflation or any possible fees, taxes, contributions or withdrawals. Returns are not guaranteed, will depend on many factors and may be negative as well as positive.

It can feel uncomfortable to see the balance drop on your KiwiSaver account or investment fund, but don’t panic. Markets can and do recover and rise, although it may take time. In the meantime, if you continue to contribute, you’re buying shares and other assets at reduced prices.

If you switch to a lower-risk fund because the market has fallen, you lock in those loses and won’t benefit as much from any rebound. But this depends on your situation – you may need the certainty of lower-risk options, e.g. if you’ll soon retire or buy your first home.

If you’re unsure what to do, one of our free ANZ Investment Advisers can help.

Putting in the same amount of money at regular intervals, irrespective of how the market is going, can be a good way to invest. 

This approach, sometimes referred to as dollar-cost averaging, can:

• Make it easier to deal with unpredictable markets
• Lower your average cost per share
• Reduce the impact of volatility on your savings
• Remove the time and effort involved in trying to buy at the best prices.

Consider how you can protect your nest egg from market falls to give more certainty about how much money you’ll have at retirement (this also applies if you’ll soon make a KiwiSaver first home withdrawal). 

When you retire, your income can come from NZ Super, your KiwiSaver savings, and any other savings and investments. Your money will need to last throughout your retirement, so you’ll have some choices to make.

For a retired couple living in a city, a comfortable standard of living has yearly spending of $86,632, according to Massey University’s annual New Zealand Retirement Expenditure Report (October 2023). For a single person, it’s $60,476. For people living in the regions, living costs are usually lower.

*If you both qualify for NZ Super.

Numbers correct at publication June 2024, sourced from: 

• NZ Super fortnighty rates – Work and Income
• Massey’s retirement expenditure guidelines – Financial Advice NZ

Financial advisers are licensed to help you plan what to do with your money. They consider your income, goals, lifestyle and appetite for risk to help create a plan that works for you. 

One of our free ANZ Investment Advisers can help get the right investment strategy to suit your needs. To talk to an ANZ Investment Adviser, call us on 0800 269 238.

Insurance can help reduce the financial impact should the unexpected happen and support you and your whānau in times of need. Types of insurance include:

• Cover to protect your home, contents or car from damage, theft or accidents
• Life insurance
• Critical illness cover
• Income protection, which helps pay the bills if you can’t work due to illness or injury. 

Before you buy insurance, read the policy to make sure you understand what is and isn’t covered. If anything’s unclear, ask an insurance adviser. Their advice is usually free.

A valid will is the only way to make sure your assets (e.g. bank accounts, car, your home) will be distributed the way you want them to be. 

Dying without a will means grieving loved ones face a longer and more complex process. Depending on the value of your assets, they may have to go to court.