This article was amended in December 2025.
Expert advises a fund review after buying your first home.
Last year, 42,811 Kiwis withdrew a record $1.8 billion from KiwiSaver to buy their first home, according to the Financial Markets Authority (FMA). However, many may be losing out on tens of thousands in retirement savings by not adjusting their KiwiSaver fund post-purchase.
Milford Financial Adviser Liam Robertson warns neglecting to reassess your KiwiSaver fund setting could cost you up to $85,000 in retirement*.
“Many people think switching funds is more difficult or time-consuming than it actually is,” he says. “They make that first home withdrawal, they forget about their KiwiSaver, and they don’t move their KiwiSaver fund to a more aggressively styled option where that is appropriate.”
‘You can’t eat your home. It won’t pay your bills’
The FMA’s 2025 report shows positive trends for KiwiSaver members. Total funds in the scheme as at March 31 reached $123 billion, up 10 percent from the previous year. Investment returns were strong with $6.4 billion in gains.
Contributions increased to $12.2 billion, with members accounting for $7.8 billion of that rise, indicating increasing engagement amongst some cohorts. However, many are still in conservative funds and the number of non-contributing members remains an area requiring improvement. As at 31 March 2025, 30% of KiwiSaver members between the ages of 18 and 65 were not contributing, up from about 20% in 2010. These trends could limit growth in the value of KiwiSaver balances over time.
“KiwiSaver isn’t just for fun at 65, it’s a source of income,” Robertson explains. “People often think that contributing 3% is enough because that’s currently the minimum contribution level, but they’re shocked when they see the numbers. You can’t eat your home. It won’t pay your bills.”
KiwiSaver funds generally fall into three main categories: conservative, balanced, and growth. Conservative funds, which focus on preserving capital and with investment typically directed to bonds and cash, are considered lower-risk and ideal for short-term savings. These funds, however, tend to offer lower returns over time. Balanced funds mix growth potential with moderate security, while growth funds, which invest heavily in shares, carry more risk but typically provide higher long-term returns for those with a longer savings timeframe.
Key steps for members following first home purchase
Reassess your fund:“Review your KiwiSaver fund shortly after buying your first home to ensure you’re invested appropriately,” Robertson says. “Your financial goals have shifted. Make sure your fund matches those new long-term objectives.”
Explore fund options:Post purchase of their first home, members who are in a conservative fund should consider moving to a balanced or growth fund to improve their long-term savings potential. This is particularly the case for those who are more than 20 years away from retirement.
Robertson notes, “If someone is 37, earning $60,000 and contributing 3%, staying in a defensive or conservative fund might leave that person with about $276,000 at 65. But switching to a growth fund could boost that to $361,000. That could provide $414 a week until you’re 90.”*
Seek advice:Professional financial advice can help people make informed decisions and get the most out of their savings. “KiwiSaver can improve your lifestyle post-65, especially if the pension isn’t enough,” Robertson says. “Taking risk with KiwiSaver is a calculated decision. It’s not like going to a casino.”
Increase contributions:Even small adjustments to a contribution rate can help. “Historically there’s been about $500 million left on the table every year because more than 1 million people aren’t contributing enough to get their full government contribution,” Robertson explains. “Recent government changes mean that the amount left on the table will be less, but still significant. For every dollar you contribute up to $1042 each year, you get 25% from the Government. That’s an investment return you can’t get anywhere else.”
*Modelling completed using the Sorted KiwiSaver calculator, assuming a $1,000 starting balance following a first home withdrawal. Inflation has not been taken into account.
Disclaimer: Milford Funds Limited is the issuer of the Milford KiwiSaver Plan. Please read the Milford KiwiSaver Plan Product Disclosure Statement at milfordasset.com. Past performance is not a reliable indicator of future performance. Investment involves risk and returns may be negative as well as positive. This article is intended to provide general information only. It does not take into account your investment needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to a Financial Adviser. The disclosure statements of all Milford Financial Advisers contain more information and are available for free on request. Visit milfordasset.com/getting-advice to view Milford‘s Financial Advice Provider Disclosure Statement.