Understanding KiwiSaver Fund Types
KiwiSaver is one of the easiest and most effective ways for New Zealanders to save for retirement or a first home. But it’s not just about signing up and leaving it alone—choosing the right type of fund can have a big impact on how much you have when you need it.
Funds are generally grouped by risk level:
Conservative funds: Mostly lower-risk investments like cash and bonds.
Balanced funds: A mix of shares and bonds, offering moderate growth and moderate risk.
Growth funds: Higher exposure to shares and property, aiming for higher returns but with bigger ups and downs.
Aggressive funds: Mostly shares, aimed at maximum long-term growth, but with higher volatility.
Each fund type suits different people at different times of life. The key is matching your fund to your time horizon—how far away you are from needing the money—and your personal comfort with seeing your balance go up and down.
Early Career: Grow Your Nest Egg
If you’re in your 20s or early 30s and retirement feels like a lifetime away, you can afford to take more risk. Growth or aggressive funds are usually the best choice at this stage.
Why? Because even though the value of your fund will bounce around from year to year, you have time to ride out the dips. Over the long term, higher-risk funds tend to earn better returns. That compounding growth can add tens of thousands of dollars to your balance by the time you reach retirement age.
It can be unsettling to see your KiwiSaver balance drop during a market downturn, but remember: the goal at this stage is maximising long-term returns, not avoiding short-term fluctuations.
Mid-Career: Stay the Course—Or Adjust If Needed
When you move into your late 30s, 40s and even early 50s, staying in a growth or balanced fund usually still makes sense for retirement savings. You still have enough time ahead for markets to recover from any downturns.
However, if you know you’ll be needing your KiwiSaver soon—say for a first home deposit—you should start thinking about dialling down the risk.
If you plan to use your KiwiSaver for a first home withdrawal within the next 2-3 years, it’s often smart to shift into a conservative or moderate fund. That way, your balance is less likely to take a sudden hit just before you need the money.
Timing matters here. If you move to a conservative fund too early, you might miss out on growth. If you leave it too late, a sudden market drop could leave you short of your goal. Talk to a financial adviser about the best time to switch based on your plans.
Pre-Retirement: Protect What You've Built
Once you’re within 5–10 years of retiring, protecting your savings becomes more important than chasing high returns. This is the time to move into more conservative or balanced funds, depending on how you plan to use your KiwiSaver money.
If you’re planning a big one-off withdrawal (for example, using KiwiSaver to clear your mortgage at retirement), moving to a conservative fund around 5 years out can reduce the risk of losing a chunk of your savings to a sudden market dip.
If you plan to leave your money in KiwiSaver and withdraw it gradually in retirement, you might stay in a balanced fund for a bit longer, keeping some growth potential while smoothing out the ride.
When and How to Dial Down Risk
The general rule of thumb is simple:
Long time before you need the money = take more risk (growth/aggressive funds).
Close to needing the money = take less risk (balanced/conservative funds).
Shifting funds is free with most providers and can be done online. But be careful not to jump around based on emotions. Moving to a conservative fund when the market drops can lock in losses. A better strategy is to plan your fund changes around life events—like turning 55 or being 2–3 years away from a first home purchase—rather than reacting to the news cycle.
If you’re not sure what to do, getting advice can be one of the best investments you make. A Union Plus adviser can help you figure out your timeline, your risk comfort, and what fund best fits your personal journey.
Setting Yourself Up for a Strong Future
Your KiwiSaver account could end up being one of your biggest financial assets. Taking a little time now to check your fund choice—and adjusting it as your life changes—can make a huge difference down the track.
Think of your fund mix like your car’s gears. When you’re young and speeding toward retirement, you want to be in a higher gear, building momentum. As you get closer to your destination, you gradually shift down, moving smoothly into the next phase of life.
Take control today by checking your fund settings, making a plan, and reaching out if you need help. Your future self will thank you.