SuperLife

KiwiSaver is designed for long-term saving. In most cases, you can access your savings at age 65 or to buy your first home (if eligible).

Whether your retirement is years away or just around the corner, how your money invested is important. The longer the timeframe, the more you might be invested in growth assets, and when your timeframe is shorter, stability matters.

A simple way to think about retirement saving

When you save for the retirement, you are trying to solve three things at once:

1. Grow your savings over time.
2. Make sure the money is available when you need to use it.
3. Make sure inflation does not reduce what that money can buy.

As you get closer to KiwiSaver retirement age the following considerations are important:

• If your money only sits in very low-return investments, it may not keep up with rising costs.
• If it is all invested for growth, it may move up and down just when you need to withdraw it.

The key is balancing both growth and stability.

One way to think about this is through the bucket approach.

Rather than viewing your balance as one single pool of money, the bucket approach groups your savings based on when you expect to use them. It’s a simple framework that helps explain why diversification, and your choice of fund, matters.

The bucket approach explained

The bucket approach groups your savings based on when you expect to use them.

1. If you are closer to retirement, you may need money available for everyday living costs.
2. You may also want to have some money invested so that it can grow and help keep up with inflation.

If all your money is invested very conservatively, it may not outpace rising costs over time.

If all your money is invested in high growth assets, you could be exposed to short term volatility in the value of your investment, when you need stability.

The bucket approach aims to balance both.

The three buckets

Bucket 1: Short-term stability

This bucket covers money you need in the next 3 years.

• Everyday living costs.
• Planned near-term expenses.
• A buffer for unexpected costs.

It’s typically invested more defensively - for example in assets like cash or short-term fixed interest.

The purpose is stability. This bucket is there so you’re not forced to sell growth assets in a market downturn to meet regular expenses.

Bucket 2: Medium-term balance

This bucket is for money that you may need in the next 3 to 10 years.

• Planned future spending.
• Larger purchases.
• Income needs later in retirement.

It is often invested in a balanced mix of assets, including bonds and some growth exposure.

The aim is to provide steadier returns than growth assets alone, but more return potential than cash over time.

Bucket 3: Long-term growth

This bucket is focused on money that you may not need for 10 years or more.

• Later-life spending.
• Protecting purchasing power.
• Growth over the long term.

It usually holds more exposure to growth assets such as shares and property.

Growth assets can move up and down in the short term, but historically have offered higher long-term returns - which can help keep up with inflation.

You stay on track when life gets busy.

When you feel you are in the right fund or funds, you’ll be able to check in now and then. It’s important to remember to not panic when markets move – KiwiSaver is designed for your long term savings, and history has shown that markets generally recover from any short term downturns.

You do not need separate accounts to apply the bucket approach. It is simply a framework to help you choose the right investment mix appropriate to when you need to access your savings.

Over time, you can move from one bucket to another. As you draw your regular spending from Bucket 1 and that money is used, money from Bucket 2 can gradually move across to top it up. In turn, Bucket 3, which is invested for longer-term growth, can help replenish Bucket 2 over time.

How this works with the SuperLife KiwiSaver Scheme

As you move closer to retirement, many members gradually shift toward funds with more defensive assets. Others choose to keep some growth exposure to help manage inflation risk over a longer retirement.

There is no single correct setting. The SuperLife KiwiSaver Scheme gives you flexibility in how your money is invested.

1. Choose from the SuperLife Diversified funds, which are pre-made portfolios designed to match different risk levels - generally, the longer the time you have until you reach retirement, the more investment risk you can take.
2. SuperLife Age Steps, which automatically sets the proportion of your investment in income and growth assets based on your age. This provides an easy ‘set and forget’ option where we will manage the split of income and growth assets for you, based on an assumed retirement age of 65.
3. Build your own investment portfolio using My Mix. You can invest in one single fund, or build your own mix from more than 40 SuperLife KiwiSaver funds including:
   1. Diversified funds - Pre-made options ranging from Conservative to High Growth.
   2. Sector funds - Funds focused on specific asset classes or regions.
   My Mix is designed for people who want flexibility and control, without unnecessary complexity.

You can update your investment strategy with no additional fees to switch.

For example:

• If you are many years away from retirement, you may choose more exposure to growth funds.
• As you get closer to retirement, you may gradually increase exposure to conservative or balanced funds.
• If you are planning to make a first home withdrawal, you may benefit from choosing stability to protect your savings. After the purchase, you can increase your growth exposure to maximise your long term growth.

How often should I review my fund choice?

For most people, a simple annual check is helpful to ensure you’re still on track and that your current fund option still matches your investment timeframe and goals. It’s sensible to review your fund when you move closer to retirement or your personal circumstances change.

Markets will move up and down. That is normal. The important thing is choosing an investment strategy that aligns with how long your money will remain invested, when you need to access it and your comfort with market ups and downs.

If you’re unsure which fund is right for you, we recommend you seek professional assistance from a licensed Financial Advice Provider before making any investment decision. The SuperLife KiwiSaver Scheme is issued by Smartshares Limited (Smart). The product disclosure statement is available at superlife.co.nz/legal.