The short answer is it depends. Photo: RNZ
I was wondering, is it better to invest more in your KiwiSaver or into your mortgage?
We are lucky and have a little bit of extra cash every pay, so we have been making additional mortgage repayments. With the upcoming changes to KiwiSaver, we won't be able to continue to do this if we don't opt out.
What is the better option? My thinking is the lower the mortgage, the less interest we pay, which would see us better off in the long term.
Fisher Funds Kiwisaver general manager David Boyle says he has received questions like this over the years and the answer is: "it depends".
"It's hard to know, without knowing the total financial position and how long they've got until they retire," he said. "Paying more off your mortgage and contributing to KiwiSaver are both smart choices, if you find yourself with a bit of money leftover before payday.
"To help with this here are some things they should consider if they keep paying a bit more off the mortgage."
- How much will they save in interest payments? That can be a compelling and motivating number
- How long have they got before the mortgage is paid off?
- How does paying more shorten the term of the mortgage?
- For KiwiSaver, how long until they're wanting to retire?
- What's the current balance and what are they projected to have?"
It's probably worth talking to a financial adviser about this. If you opt to focus on paying your mortgage faster, you might need a plan to get you on track for retirement, once that loan is gone.
The increase to contributions of 4 percent is stepped over the next couple of years. Are you likely to receive a pay rise over that period that will help you continue paying a bit off your mortgage, as well as contribute a bit more?
You also have the option to temporarily lower your contribution rate back to 3 percent if you want.
I am the epitome of being a victim of the government's totally unfair direct deduction policy.
I should have started receiving my richly deserved superannuation when I qualified for it 9.5 years ago and the Winter Energy Payments seven years ago when they began. Consequently, over $300,000 has been stolen from me and I live in abject poverty as a result.
I am a dual citizen from America. I have lived here 19.5 years, so on what legal basis has the government for denying the WEPs?
Its written explanation is that it would be difficult to administer to NZ seniors not currently receiving a government benefit such as superannuation. That is mind boggling and I hope you see fit to write about this outrageous treatment of nearly 100,000 Kiwi seniors.
Sorry, yes, I've checked with the ministry and it confirms that people who are not getting NZ Super because of an overseas pension cannot get the Winter Energy Payment.
Generally, if your NZ Super entitlement has been eliminated by your overseas pension, it's because what you receive from overseas is more than the NZ Super payment.
Send your questions to susan.edmunds@rnz.co.nz
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