Cooking the Books podcast: Why KiwiSaver could be lulling you into a false sense of security

The settings on your KiwiSaver could mean you end up with more money, without sacrificing anything extra. Photo / 123RF

Each week the NZ Herald and Newstalk ZB's Cooking the Books podcast tackles a different money problem. Today, it's why you can't just sign up to KiwiSaver, and leave it at that. Hosted by Frances Cook.

KiwiSaver is great, in that it's helped those of us who aren't used to handling money put together investments for our retirement.

But there's the risk that once you've got it, you think you're all done.

After all, the government wouldn't spend all that time creating this scheme, and then not make it fit for purpose, right?

Well, the problem is they designed it for the starting point to do the bare minimum, and after that, you can adapt it to your own personal situation. Yet many of us haven't taken that second step.

Most people contribute just 3 per cent of their pay into their KiwiSaver.

Far better than nothing, but definitely not enough to avoid a tough retirement. Many say you should put aside at least 10 per cent if you want to enjoy your golden years.

And then there's the fact that the default setting is conservative. It's a good holding pen, but you're not supposed to stay there – those of us with years to go until retirement are usually better off in growth.

Growth means your money earns money, so you usually have more at the end without feeling the pain of saving more. You sacrifice no extra money, you just change a couple of settings.

So, what are the easy ways to set your KiwiSaver up right for your situation, so that you can get it done and go back to living your life?

For the latest Cooking the Books I talked to kōura KiwiSaver CEO Rupert Carlyon, and David Boyle from Mint Asset Management.

We discussed whether there's a problem with the three per cent contribution rate, whether New Zealand should consider "sidecar savings", and why choosing between a conservative and growth KiwiSaver is so important.

For the interview, watch the video podcast above, or play the audio here.

If you have a question about this podcast, or question you'd like answered in the next one, come and talk to me about it. I'm on Facebook here, Instagram here and Twitter here.

You can subscribe to this podcast on iHeartRadio, Apple podcasts app, or Spotify, to make sure you never miss an episode.