Optimal KiwiSaver Contribution Strategy: 3:5:3 Approach Explained

How much contributions should you put into kiwisaver? For PAYE workers, you can put in as little as 3% or as much as 10%.

The answer always comes down to you and your personal situation but here is what works well for most people.

Take a 3:5:3 approach.

3% of your income into kiwisaver

5% of your income into a non kiwisaver fund

3% of your income into personal insurance

The rest of your income you can do what the heck you want knowing that you've put the right amount into your financial future

You need to put in 3% contributions yourself to get matching contributions from your employer so do that much. This is like investing on steroids with the money thrown in by your employer plus the government stumping up with $521 per year.

Put 5% into a non kiwisaver fund because it is not locked until age 65 and I believe there are better investment options outside of the kiwisaver market

3% into personal insurance: The temptation is to put another 3% into funds and grow your wealth but that's really playing Russian Roulette if you haven't put some money into income protection, trauma and life insurance. If you've set a plan to grow your wealth with 3% kiwisaver and 5% non kiwisaver investments, then put some money into insurance to lock the plan in for you and your family so your financial future looks good whether you are lucky or not.

This 3:5:3 appropach is a great starting point and it will differ for each personal situation. If you want to get your allocations right for you as well as choice of funds and insurance, then get in touch with us. We would love to get you on the right path and keep you there.