SHelley Hanna: Kiwisaver is worth joining even at 61

Q I am self employed and aged 61. Should I join KiwiSaver before it's too late? I calculate that I will get $3607 from the Government over the next five years if I join now, and that's worth having. I have other savings and don't plan to stop working until I'm 70.

I have received a lot of inquiries from people like you who are approaching retirement but have not yet joined KiwiSaver. It is very important to note that once a person turns 65 they cannot join KiwiSaver. If they are already a member they can stay in for as long as they want to and even switch schemes, as their retirement needs change.

If you join KiwiSaver now, you will receive the $1000 "kickstart" plus up to five years of Member Tax Credits ($2607) as long as you contribute at least $1043 per year (or $87 per month) yourself. So yes, you could receive a total of $3607 from the Government over the next five years. Just be aware that there is no guarantee that either the Member Tax Credits or the "kickstart" will be available forever. With over 2 million New Zealanders now in KiwiSaver, it could be argued that those enticements have served their purpose. All the more reason for you to get cracking.

As you have other retirement savings and indeed plan to keep working, you have a longer investment timeframe than many others your age. Bear this in mind when selecting a fund. Complete a risk profile questionnaire first (an AFA will help with that, or you can find one online) to assess your attitude towards volatility and whether you sit closer to the blunt or pointy end of the risk spectrum.

There is no simple online tool that will direct you to one particular fund that is right for you. There are several things to consider. Investment returns - is the fund you've chosen one of the better performing or worst performing in its sector? Websites such as Morningstar or www.interest.co.nz provide useful reports. Fees are important over the longer term, but higher fees can sometimes be justified by higher returns. Know where your fund ranks in relation to other similar funds.

According to the latest quarterly report from Morningstar, the highest performing fund to the end of December achieved 26.8 per cent while the lowest achieved just 2.5 per cent.

Between those extremes, there were many that achieved double digit returns as markets staged a recovery. As long as your fund balance is low, returns are not so important. They become much more important as balances grow. Anyone who has been in KiwiSaver for a few years should review their fund, particularly once the balance is over say $10,000.

Almost as important is communication. Some fund managers send out newsletters that are neither informative nor easy to read, while others really make an effort to engage their customers. Clear, easy to read reports will help you keep tabs on your savings.

Most banks give their customers access to their KiwiSaver balances online and promote that feature as a benefit. It may not work for everyone. If you are struggling to pay the bills, seeing that you have $13,000 in your KiwiSaver account could be frustrating as you cannot easily get your hands on any of it until you turn 65 (or in your case have been in the scheme for five years).

It is very easy to join KiwiSaver. An Authorised Financial Adviser like me can help you choose a fund that suits you; you can enrol through your bank into one of their funds or you can sign up through the website of most participating fund managers. Once in a fund you can change to another at any time, so don't let the dilemma of picking the right fund be an excuse to put off joining.

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 8703838. The information contained in this article is of a general nature and is not intended to provide personalised advice. If readers have any KiwiSaver questions they would like answered please go to www.peak.net.nz or email shelley.hanna@peak.net.nz.