This article was published on 11 December 2007. Some information may be out of date.

Can’t afford KiwiSaver? That’s unlikely

A reader protests that, despite my suggestion that everyone under 65 should sign up to KiwiSaver, “reality has it that not many of us can afford it!”

He adds, “Too many of us are living hand to mouth and little room is given for savings…. Until this scenario changes, don’t expect much by way of increases in numbers wanting KiwiSaver.

“This year I got a 2.5 per cent pay increase. Meantime petrol, milk and other dairy products have gone over 20 per cent increases…. So we are left getting further and further behind.”

Perhaps it feels that way. But new data show average household income rose 10.2 per cent in the last three years, while inflation was 9.1 per cent. Not a big difference, but we’re not going backwards.

More striking is the 17.7 per cent rise in wages and salaries — almost twice inflation. It was the poor folk on benefits or superannuation whose incomes rose less than inflation, dragging down the average. And income from self employment fell considerably.

While our reader says he’s going backwards, most wage and salary earners are not.

Confirming this, 51 per cent of respondents told the household economic survey that their income is enough or more than enough to meet everyday needs.

They should all be able to do KiwiSaver at least minimally. And we can add everyone who is not employed — including the self-employed. Non-employees can contribute nothing to KiwiSaver and still get the $1,000 kick-start.

Many employees, too, could manage to contribute 4 per cent of their pay for just one year, after which they can take continual contributions holidays.

For their pains, they will receive the kick-start and the government tax credit, matching their contributions up to $87 a month. Also, employers are expected to contribute from next April.

Everyone will gain more if they contribute further. But a small start is much better than none — grabbing the kick-start while it’s still on offer.

That leaves us with just one group: employees who simply can’t spare 4 per cent for one year. They have several options:

  • Get another small job, and contribute 4 per cent of that pay. You don’t have to join through your main job.
  • Embark on a year of living sparingly. Take a cheaper holiday, don’t replace furniture and appliances unless they die, spend less on clothes and so on.
  • Eat into any savings, or add to your mortgage, to make ends meet for the year. The KiwiSaver incentives are so good that you will end up better off.

Even those with big high-interest debt can win financially by joining KiwiSaver, particularly in the first year. After a year, put what you were putting into KiwiSaver into debt repayment.

Still not convinced? Note that we’re not talking huge amounts. Four per cent of $30,000 is $23 a week, and 4 per cent of $50,000 is $38 a week.

Also keep in mind that whatever you contribute to KiwiSaver is still your money — and it’s you who is highly likely to benefit from it later.

If you want to live on more than NZ Super in retirement — currently $14,400 a year for a single living alone or $22,200 for a couple — do yourself a favour and join KiwiSaver. (Like the poem?)


In a recent column, I wrote about buying gifts for needy overseas people on behalf of your friends and relatives. I’ve since heard that Save the Children — at or 0800 167 168 — also offers such a programme.

No paywalls or ads — just generous people like you. All Kiwis deserve accurate, unbiased financial guidance. So let’s keep it free. Can you help? Every bit makes a difference.

Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it.