I still have a mortgage and don’t earn a lot, when do I start saving for retirement?

The short answer is start today, no matter how small the investment is it all adds up over time.  If you go through your spending and check if you are spending wisely.  Is there an area where you can cut back even just a little?  Is there an alternative cheaper option for something you are buying?  Have you checked that you really need everything you are spending your money on? Have you thought about taking on an extra job? 

What are your options for where to put your retirement savings? 

Kiwi Saver
I think this is most people’s best option as a place to start.  The vast majority of people will not miss 3% of their income.  When your employer adds their 3% (less your marginal tax rate) and the government matches your contribution up to $521 each year.  If you are planning on buying your first house in the future there is also the housing subsidy scheme.  The downside is that your funds are locked into the age of 65, with the exception of extremes cases of hardship.  The up side to that is that as you can’t touch it you won’t be tempted to use it so the funds will defiantly be there when you retire. 

Locked in Superannuation
This is where you can invest a certain amount per month into an investment that is locked in until an age of 55, 60 or 65.  Like KiwiSaver you can’t get access to the funds until the retirement (maturity) age of the policy. The advantage of these investments is that you can decide how much you contribute and you are not limited to a minimum of 3%, however most have a minimum of $100.  The majority of employers only offer KiwiSaver now but some still have their own superannuation schemes where the company will contribute (usually large corporates), so if you go with this option you may not get the additional benefits of the employer and government contributions.   Most banks and investment companies offer these types of products.   

Unit Trusts
The main way these differ from the above is that they are not locked in, i.e. you can cash them in at any time.   This may not be a good thing because at the end of the day a pension or superannuation fund is for your retirement so if you don’t think you are going to be disciplined then it’s probably best to go for a locked in option.  There are a number of products to choose from in this area.  Like superannuation you can get these products through most banks and investment companies. 

Saving 10% of what you earn
If you get into the habit of saving 10% of what you earn from the time you start working and put it into a long term savings account, stick with this habit throughout your entire working life you will probably have more retirement funds than 95% of the population.  RICHEST MAN IN BABALON is a very well-known book from many decades ago which espouses this philosophy. 

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