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If you’re self-employed, KiwiSaver can feel like one more thing you’re meant to do perfectly while your income does anything but. We sit down with Dave to get practical about retirement savings for business owners, contractors, sole traders, and anyone paying themselves through drawings, dividends, or payroll. We start with what’s been in the news: the possibility that KiwiSaver contributions could become compulsory for self-employed New Zealanders, and what that might mean in the real world when cashflow is unpredictable.
We also dig into the part that catches people out: business structure. If you’re both the employer and the employee, the contribution maths can feel like it “shoots you in the foot”, especially when you’re trying to keep money in the business. We talk through why some people take a KiwiSaver holiday, how to think about a realistic contribution rate, and why paying yourself first is more than a motivational line. It’s a system that protects your future when the next slow month arrives.
From there we zoom out to retirement planning. Relying on your business alone is risky because industries change, payment models shift, and five good years can be followed by five tough ones. We cover the value of putting even small amounts aside, including contributing enough to unlock a government top-up, and we look at alternatives like managed funds that can offer similar long-term investing with potential tax advantages depending on your PIR. We also touch on a surprising upside: consistent saving can make your business look more sustainable and valuable if you ever decide to sell.
If you’re building a business and still want a comfortable retirement, hit play, then subscribe, share the episode with a self-employed mate, and leave a review with the one KiwiSaver question you want answered next.
Kiwi Saver for self-employed people. 2.0. A lot on the news at the moment around KiwiSavers for self-employed. We've touched on that in the past, but I've got Dave here again. Hello, Dave.
So yeah, look, it's been um and they mentioned it in the press today, it's but it's been hard for key for KiwiSaver for people, self-employed people to fund their own KiwiSaver. Some people are very very good about paying themselves. We've talked about in the past about paying self first. So make sure that you are getting out of your business that you need to get out of it. One of the things that the government may be looking at, and again, we we don't know what will change depending on which government gets in, I guess, but they're looking at saying we make it compulsory for self-employed people to put money into their KiwiSaver. What that could look like. I I like the idea. I have always been a fan that they should probably, in theory, whatever you're paying yourself in a way or through dividends or through earnings, think about putting three or four percent of that into your KiwiSaver to give you another string to your bow to retire. You deserve as a as a business owner, you deserve to retire just like anybody else with the same money, with the same earnings, and it just means that not all your eggs are in one basket. That's
The way I see it, and I will flip it here for a second from a self-employed person point of view. When I applied for um Kiwi Sever holiday, I got a call from IRD and they were like, uh usually we'll contact the employer, but we see that you're the employer and your employee. Um so it's okay, we we'll just take your word for it, we'll get it cancelled. But what I've realized in that moment is that I would have been contributing seven percent because I will be contributing three and a half percent as employees, yeah, yeah, and then three and a half percent as an employee.
SPEAKER_00
Yeah.
SPEAKER_02
So in total it was seven percent. And this is why I took the holiday, yeah, because I thought instead of going seven percent, all I could afford was let's say five percent.
SPEAKER_01
Yeah. Because it does shoot you in the foot a little bit. So it would depend on how you got your business structured, right?
SPEAKER_02
If you put yourself on the payroll, yeah, correct.
SPEAKER_01
Yeah, correct. Yeah, yeah. I guess that's that's something they maybe need to look at, but then you've structured your business to make yourself an employee of your business. And therefore you have to follow the rules and the laws of KiwiSaver, especially. So yeah, would I but I'd have a look and see how you structured it and whether how you're paying yourself and how what are you an employee? And you're right, if you don't want to put seven percent in, I would flip that again and say, Why don't you want to put seven percent in?
SPEAKER_02
Because I can't afford it.
SPEAKER_01
No, and that and that is, you know, you're right, that is an issue. But that's I guess that's a lot when you're running a business and you want to put it back into your business.
SPEAKER_02
It does, and you know, especially in our industry and like same as our real estate friends, you know, it it abs and flows, right? Like some months you make a lot of money and then some months you just don't.
And I think being in control of your own money gives you that power of going, cool, this month I made heaps of money. Yeah, I know that I can put money into my KV server. Yeah, next month's not so much because I need to pay all those bills, and then you recover again to the months after. Yeah. So it's sort of that position that a lot of self-employed people are in.
SPEAKER_01
Yeah, that's true. And it's and again, it comes back to the structure because if you I mean, again, you I'm I'm no lawyer on how to set up a business, but if you're acting as a sole trader or if you're acting at taking earnings from a business as a business owner and dividends and and so forth, then you can just put ever whatever you want into your own Kiwi Saver because you've got no obligation to pay yourself the Kiwi Saver. So I guess that's when you are in a better position to play around with it a bit more. But again, I I agree it's there's definitely ebbs and flows when you're a business owner for sure.
SPEAKER_02
But as we discussed in the previous episode, even if you put $20 a week, then you automatically qualify for $262, was it? Yep. From the government. From the government, correct. So at least if you make that, that's already $1,200 a year that's going into your Kiwi Saver in total, and that that multiplies because it will compound.
SPEAKER_01
Yeah, and it does. And you know what? If the government are gonna give you money, then I'll take it. And while it's there.
Um but yeah, I think I think it's really important for a self-employed person just to sit down and have a look and go, what are my plans for my retirement? Am I relying on my business for my retirement? And that's not always gonna work. Things can change pretty rapidly in in in all worlds, you know, and and while you think you've got a no disrespect, while you think you're going great for five years, there could be a very change a big change in in whatever it is you're in for the next five years. And if you haven't been squirrelling away a little bit of money into Kiwi Saver, maybe that's a good way to protect your savings as well, then where does that leave you for your retirement?
SPEAKER_02
Correct.
SPEAKER_01
You know, and and there's changes to, you know, and you if you look at your industry of how you get paid um from different organizations that change the dynamic of how you work, you know, so you never know what's going to happen.
SPEAKER_02
Oh, exactly, exactly. And look, for an average, you know, self-employed person if they're on 150k income, um 3.5% a year, that's about 5,250. So we're looking at over 10k a year, yeah. If they were doing 7%.
SPEAKER_01
Yeah.
SPEAKER_02
10k a year into their Kiwi server.
SPEAKER_01
Yeah. Yeah, that that takes if you're looking at it that way, it takes a little bit away from that. I I would recommend looking into like like I said before, how have you how have you structured it and what are you doing to protect yourself for your retirement? I think they're the two key questions to ask as a business owner, I think. It'll be interesting to see how that goes if they do change the rules for for self-employed people and make it compulsory to put money into your Kiwi Saber. What does that mean for somebody as yourself who runs a business that pays themselves a salary? It'd be interesting to see how they deal with that. I don't know how they could deal with it differently. But maybe there's something they could put in place.
I also know a lot of self-employed people that have been using managed funds, so not Kiwi Saver as such, but similar to Kiwi Saber. Yep.
SPEAKER_01
Similar setup, yep.
SPEAKER_02
Yep. To put the money away.
SPEAKER_01
Because don't forget there is some tax savings too by having an investment that is capped at 28%. So there is some tax savings if you've got money to put away somewhere, then do you want to pay 33% on the income from that investment or do you want to pay 28%? 28% or 39%, depending on how well your business is doing.
SPEAKER_02
And to be honest, again, I'm gonna flip it on its head fully and go if you're running a business and if you're managing to put money away into your Kiwi Saver, when it comes to the resale of your business, that also adds value because you want to sell a business and show it to someone that business has been fully operational, you've been managing to put money away for your own retirement, paying yourself salary and others and keeping on top of your bills. So it's actually a really good business to buy.
SPEAKER_01
It shows that this is very sustainable business, yes, correct.
SPEAKER_02
And if you are struggling in your business, yeah, should you be in a business?
SPEAKER_01
Well, that's the next question, isn't it? That's when you need to sit down and uh reassess everything, I guess.
SPEAKER_02
Yeah. And I know like there is a lot of people, you know, hanging on to the hope that things will turn around, things will get better, etc. etc. But there comes a point where you just really need to step back and have a look. Are you trying too hard, working too much and burning yourself out?
SPEAKER_01
And not paying yourself first.
SPEAKER_02
And not paying yourself first, because then what good does it do to anyone? Yeah, to your family, to yourself?
SPEAKER_01
Yeah.
SPEAKER_02
Are you better off just hanging in a towel? Yeah, go and work for someone for some time. Yeah. Get that kiwi saber.
SPEAKER_01
Yeah, get the kiwi saber rocking.
SPEAKER_02
Get the kiwi saber rocking, you know, and then go back and be self-support again.
SPEAKER_01
Yeah. Yeah, look, and it's a tough one because people are very passionate about their businesses, which I love. And I've got a lot of respect for business owners. But again, like you say, at what point do you look into your future and go, I want to retire and retire comfortably. How am I going to do that?
