For many of us, a daily caffeine fix is worth the money - but it's also worth considering how much more we could have at retirement if just twice a week, coffees were homemade rather than bought.
As KiwiSaver is a retirement savings plan rather than an emergency fund, deciding how much to contribute is tricky. But with many of us frittering our hard-earned cash on coffee, lunches and unplanned treats, it's worth considering whether some of that money could be put to better use.
Financial Services Council data shows as at March 31, the average balance across all KiwiSaver members was $25,862. A 2020 New Zealand Retirement Expenditure study by Massey University's Fin-Ed Centre shows a single person living in the metro area wanting to live a 'no frills' lifestyle could expect to spend $703.60 per week ($993.34 for a 'choices' lifestyle).
Based on NZ Super of $436.94 (single person rate for 2021 at tax code 'M'), the weekly difference (gap) is $266.66, or $556.40 for a 'choices' lifestyle.
Each person's retirement savings goals will differ according to their age, income and financial commitments, experts say. But for those of us wanting to check if we could comfortably contribute more, Newshub asked KiwiSaver provider Milford Asset Management what difference contributing $10 per week more could make at retirement.
For a 35-year-old with a current KiwiSaver balance of $20,000 in a growth* fund earning $55,000 (gross) per year, increasing the contribution from the minimum of 3 percent, to 4 percent could mean an extra $28,000 by age 65.
Eachann Bruce, financial adviser at Milford Asset Management says for those who are comfortably able to make the change, which equates to around $10 per week, "about the price of two cups of coffee", it could mean an extra $1000 per year in income in retirement.
"If people decide not to take their money out as a lump at age 65, [the amount] people can afford to live on would increase by around $1000 per year over 25 years [to age 90]," Bruce explained.
KiwiSaver members can choose to contribute 3 percent, 4 percent, 6 percent, 8 percent or 10 percent. The money is deducted from pay automatically, removing temptation to spend.
"[An] extra $10 each week could be worth $20 per week as an additional income which would mean a lot more flexibility to follow your passions and spend more time with family and friends," Bruce added.
As a minimum, contributing $1042.86 over the year to June 30 (around $21 per week) means members receive the Government contribution of $521.43.
Having seen people run into financial difficulty and unable to draw on their KiwiSaver funds, independent financial adviser Martin Hawes said members should keep this in mind before putting additional funds in.
Financial Markets Authority (FMA) manager - investor capability Gillian Boyes said for young people, increasing or re-starting KiwiSaver contributions can be a good way to build retirement savings - and save towards a first-home. But members should also understand funds are locked in and not available if their goal changes.
"For an alternative savings pathway, you could ask your KiwiSaver provider if they have similar, non-KiwiSaver funds and invest in one of those instead," Boyes suggested.
Members should check if there's a minimum investment requirement, and understand the risks and recommended investment timeframe.
"For example, you could consider a conservative fund if you need the money in the next three years, or a growth fund if you don't need it for another 10 years," Boyes said.
The FMA suggests members review KiwiSaver annually, including how much they're contributing and whether the fund their money is invested in meets their personal goals.
KiwiSaver members unsure whether their savings are on track for retirement can check their annual statement, which now shows projected savings, as a weekly dollar value of income in retirement. They can also use Sorted's online tool to calculate how savings are tracking.
*Projected return of 4.5 percent for a growth fund is after tax and fees. Actual returns vary.