Those two and several others would never vote anything but right-wing, and if ever the subject came up, they would despise the idea of paying more tax (or any tax if they could avoid it).
So we have a percentage of old people soon never to need money again, who will not spend it or share it. I can’t imagine their bank balances. I guess security only comes when it reaches seven figures, otherwise they feel poor. Meanwhile, they can’t enjoy their money.
It bothers me because of our terrible inequality and poverty. What a difference it would make if some of this wealth were prised out of these padlocked accounts. And the oldies would realise how much joy comes from making a difference by giving.
A: My first response to your letter was to fully agree. But then I got thinking.
It’s too easy to leap to judgment. Your acquaintances might have had to spend the proceeds of the house sales on repaying debt, or supporting family members you don’t know about, or maybe they made large donations to charity, or … who knows? We’re probably all guilty of making assumptions about others’ situations that aren’t correct.
There’s also the fact that old habits die hard. It’s often observed that people who have had to pinch their pennies earlier in life find it really hard to spend up large if they later become wealthy.
Still, if these people are as well-off as you assume, let’s encourage them to indulge in treats for themselves, their friends and family, and chosen charities.
As you say, giving brings joy. It’s even been proven scientifically.
“Several studies over the last decade have demonstrated that spending money on someone other than yourself promotes happiness,” the American Psychological Association says.
“That’s because when we behave generously – be it donating money to charity or giving a loved one something they really want for a holiday – it creates more interaction between the parts of the brain associated with processing social information and feeling pleasure.”
P.S. Perhaps my response is misjudging you. Guilty as charged!
KiwiSaver and change
Q: We are planning to bequeath significant amounts to each of our six grandchildren – all under 10 – but wish to ensure that this is accessed only for worthwhile purposes such as home purchase.
KiwiSaver seems the ideal vehicle for this, but we recently read that New Zealand is unusual by international standards in allowing purchase of a first home as a reason for withdrawing savings.
We would not want to put the money into KiwiSaver if the grandchildren had to wait until retirement to access the money, because KiwiSaver first home withdrawals are stopped.
We understand that non-KiwiSaver managed funds would be an alternative, but are concerned about inappropriate premature withdrawal. (I’m speaking as someone who in his mid-20s, with two children and renting a house, took out a bank loan to buy a speedboat!)
Given the various changes made to KiwiSaver already since establishment, is there sufficient certainty that this ability to withdraw for first home purchase will still be there in 20 to 30 years? Or would it be better to take the non-KiwiSaver managed fund route?
A: You’re right. Governments have been unable to resist the temptation to meddle with KiwiSaver – which is not helpful for people trying to get their heads around how it works.
And nobody – no government, law court or any other authority – can ever guarantee what a future government will or won’t do.
When KiwiSaver started, several experts criticised the first home withdrawal provision. “This scheme is meant for retirement savings. It’s not good to allow people to empty those savings partway through,” they argued.
I disagree. Trying to enthuse young people, let alone children, to get involved in a scheme that will reward them in 50 or 60 years is pretty much impossible. But buying a house is something they can picture.
Anyway, the first home withdrawal is part of KiwiSaver, and I can’t imagine any government ever banning it, for two reasons:
Popularity. In the year ending March 30, more than 50,000 members withdrew $2.2 billion for home purchases, according to the Financial Markets Authority’s 2026 KiwiSaver Annual Report. And many thousands more plan future withdrawals.
If any government stopped that, there would be an uproar.
Cost. Unlike many KiwiSaver features removed by governments presumably to help balance budgets, KiwiSaver first home withdrawals don’t cost the Government a cent.
True, the Government used to give a KiwiSaver first home grant – of up to $5000, or $10,000 for a new build – for those who qualified. But that was stopped in 2024.
That got me thinking: how many of the major changes since KiwiSaver started in 2007 have increased government costs, and how many have reduced them?
The short answer is one change has cost more, while many changes have cut costs or brought in revenue.
In the early days, the Government removed a $40 annual fee subsidy it paid every member. It also ended a tax credit for employers, and then started to tax employers’ contributions to employee accounts. And in 2015 the $1000 kick-start was removed.
The Government contribution (then called a tax credit) halved in 2012, and halved again in 2025. From the early days of getting a dollar for every dollar you put in, up to $1043 a year, members now get just 25 cents, up to $261.
The one innovation that costs the Government more was giving 16- and 17-year-olds government contributions from last July. But at the same time, government contributions to people with taxable income of more than $180,000 ended.
Other major KiwiSaver changes include altering employer and employee contributions levels, and adding new rules about savings suspensions, default schemes, and annual statements. Also, over-65s are now allowed to join, and people with life-shortening congenital conditions can now withdraw money before 65.
Meanwhile, providers have tended to reduce fees, offer more responsible investing options, and broaden the range of investments members can make.
While many of those changes are improvements, they haven’t cost the Government anything.
Something else I noticed: pretty much all the major negative changes to KiwiSaver have happened under National-led governments. True, KiwiSaver was the Labour Party’s baby. But National has continued it, even while whittling away at government support.
Okay – I’ve strayed a long way from your question. My short answer is that I think we can be confident KiwiSaver first home withdrawal will remain.
Worst-case scenario: your grandkids don’t get to use the money you gave them until retirement – by which time it will have grown hugely. That’s not terrible.
Your speedboat story underlines the perils of putting money within the reach of the young!
Ask the young man!
Q: Our grandson, aged 21, graduates with a degree in engineering product design very soon, and we would like to recognise his achievement. We are thinking of $10,000 as a fund which he could add to, and we are thinking asset creation and not a handout.
Short of ideas, we were thinking of either adding to his KiwiSaver account or offering a Sharesies package. He’s intent on a master’s degree in Canada, so may not be back in New Zealand in the short term. How would you respond to this situation? And what would be the relative merits of each?
A: This is an entirely different situation from the above Q&A.
Those grandchildren are under 10. Who knows what they’ll be like as young adults? With six of them, there’s a good chance some would get “speedboat aspirations” if they had easy access to their grandparents’ gift.
On the other hand, your grandson has proven he can apply himself, and has plans to further his education.
I suggest you just ask him where he would prefer the money to go. You can, of course, point out the pros and cons of your two good ideas – the main difference being the ability to spend money in Sharesies in any way he wishes.
But he might prefer to use the money to fund his adventures in Canada. And, speaking (or writing) as someone who benefited hugely from going to the US to do a master’s degree, I would applaud that.
A handy rule
Q: Is it true that if I invest in KiwiSaver I can double my money in only seven years?
I read about the Rule of 72, which suggests that could happen. How does it work?
A: It’s certainly possible you could double your KiwiSaver balance in seven years, even without any contributions from you, your employer or the Government.
Some people in higher-risk funds will have done just that over the past seven years. But that’s because sharemarket returns have been unusually high.
The Rule of 72 is an approximation, but it’s very handy. It tells us two things:
The annual return you need if you want to double your money in a certain period – in your case in seven years.
Divide seven into 72, and you get about 10. So you need a return of about 10% a year, after fees. Don’t count on that in future!
Another example: say you want to double your money in 12 years. Divide 12 into 72, and you get six. So your return after fees would need to be around 6% a year.
How many years it will take to double your money, if you know your return after fees.
For example, if your return will be 8%, divide eight into 72 and you get nine years.
If you’re in a lower-risk fund, your return after fees might be 3%. Divide that into 72. It will take about 24 years for your money to double.
These are all just about – not highly accurate mathematically. But they are near enough for most purposes.
Worth it to shop around
Q: I joined a bank’s cashback rewards credit card plan, which makes more sense to me than the debit card I have been using. The debit card is fees-free, whereas the cashback card charges $80 a year. But wait, there’s more!
In the bank’s literature with the card there was a note: “The bank may waive the fee with a tailored offer, or at our discretion”.
I wrote to the bank advising I have been a long-time customer and they might consider waiving the fee. They advised back that if I joined their “Freedom Years” plan they would waive the fee as long as my NZ Super went into my normal banking account (which it does).
There is no minimum spend, so everything I purchase will go on the card, which gives 55 days credit as well.
The point is that by checking banks’ fine print and going through their and their competitors’ offers, substantial savings across many areas can be made and “rewards” generated.
The waiver is for the first year only, but the bank will have the option of renewing the waiver, or for me to move to another bank’s card if the same offer is available.
Yes it can be boring “shopping around”. But the money adds up, including online term deposit offers (or better, speak to a bank’s agent personally as they have “discretionary ability”).
Similarly, the SuperGold Card keeps updating new offers, and my supermarket, lawyer and dentist also offer the SuperGold Card discount. These are major expenditures and thus major savings. Always ask when buying or using services anywhere.
Trust this may assist some folks.
A: Great advice, thanks.
Shopping around is so much easier these days, with the internet, and so often we’re richly rewarded for doing it.
And so many people have said, over the years, that they got a better deal from their bank – whether a lower mortgage rate or a higher savings rate or a fee cut – just by asking.
It doesn’t really seem fair to others. But we’re all free to be on the winning side.
* Mary Holm, ONZM, is a freelance journalist, a seminar presenter and a bestselling author on personal finance. She is a former director of the Financial Markets Authority, the Banking Ombudsman Scheme and Financial Services Complaints Ltd. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to mary@maryholm.com. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.
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