Aussies retire $400,000 richer than us. Here are six ways you can start bridging that gap
Friday, 23 January 2026
The gap between Australians and New Zealanders retiring is no secret. The average 65-year-old across the Tasman has a superannuation balance of AU$420,000 (NZ$487,000), a staggering leap from the $70,000 the average New Zealander of the same age currently has in their KiwiSaver.
There are good reasons for this difference. Australia’s employer contributions are compulsory and far higher than ours at 12%, and their system has also been running for longer.
Both of those factors have enabled Australians to build far more retirement wealth than we have. It’s also worth noting that the Australian pension system is means-tested, whereas ours is universal.
But if you were to ask the average retiree in New Zealand if they felt that super payments were enough to cover their expenses, you’d more than likely get a resounding “no”.
Unless rules change, getting the comfortable retirement most of us want will be contingent on the small decisions we make during our working lives.
As long as our system stays voluntary, the onus is on us to fill the cup we plan to drink from when we reach retirement.
Fortunately, there are a few things we can do to start narrowing the $400,000 gap with our neighbours.
Contributions multiply
The major reason Australia has hurtled so far ahead is because their contribution rates are simply so much higher. In Australia, employers contribute 12% over and above the annual salary of the worker. This happens regardless of whether the worker contributes or not.
Our system is voluntary, and those who do contribute often only pay the minimum figure to qualify for the employer contributions.
“Most people are stuck on the 3% default rate, though that will not give anywhere near enough for retirement,” says Kōura Wealth founder Rupert Carlyon.
“The discipline of consistently putting money away is what drives wealth rather than trying to hit the lights out with massive investment returns.'
Carlyon recommends an online calculator as a good way to see how much your contributions are likely to provide and whether this will be enough to secure a decent retirement. If the numbers don’t add up to what you expect, then it might be time to start increasing your contributions.
And you don’t have to make a massive leap at once. KiwiSaver funds have enough flexibility to allow you to increase your contributions by a few percentage points every few years. You could even do this in line with salary raises you get over the years.
Every added per cent invested over time will be allowed to compound, boosting your retirement savings.
Use your mortgage windfall strategically
Approximately 40% of fixed mortgages will roll over onto lower rates in the first half of 2026. The choice here is simple: you can pocket this extra money and spend it, or you can identify a strategy to put this money to work over the longer term.
'Anybody that's rolling off a higher mortgage rate onto a lower mortgage rate should really consider and challenge themselves whether they do need that extra week-to-week money… and whether they can use some or all of that to set themselves up for their long-term retirement,' says Emma-Jayne Liddy, the general manager of wealth for ASB Bank.
Read more by Damien Venuto:
This could mean keeping your repayments the same and shaving years off your mortgage or using this as an opportunity to contribute a little more to KiwiSaver.
If you’ve been comfortable paying the higher rates, then putting the spare money to use in different ways can be a solid way to secure a healthier retirement.
The timing to bump up contributions is also good right now because employer contributions will increase to 3.5% in April.
“We’re at this positive intersection right now where you could be coming off a higher mortgage rate, and you’ll also get the benefit of higher employer contributions going into your KiwiSaver,” says Liddy, explaining that we should use this time to assess our longer-term plans and see what works best for us.
Right now is a good time to think strategically about where we want to be by retirement and how we plan to get there.
Get your kids involved early
Charlie Munger, the longtime investing partner of Warren Buffett, had a slightly crass, albeit effective, way of expressing the arduous road of investing.
“The first $100,000 is a b****, but you gotta do it,” he said.
“I don't care what you have to do. If it means walking everywhere and not eating anything that wasn't purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.'
The earlier you get started on that road to the first $100,000, the better you’ll be set up for the future.
This is why Pathfinder Asset Management chief executive John Berry is so adamant about getting kids into KiwiSaver and investing as early as possible.
“I would challenge anyone with kids to really start thinking about how they can engage young ones with the concept of investing,” says Berry.
“You can start with really small amounts. It’s about getting young people to incorporate this thinking into their lives.”
By showing younger people how wealth grows in small increments, it can help to develop values that set them on a better path.
It’s not about handing hundreds of thousands of dollars over to your children in their 20s but rather about developing the habits that will enable them to build wealth in the long term.
Select the right fund
All things are not equal in the investing world. Some funds are better than others, and it pays (literally) to take an interest in performance numbers, fees and the options.
“Make sure you are not in a dud fund,” says Carlyon.
“There are a few funds that you want to stay away from. In your KiwiSaver app, have a look at your fees and your long-term performance over the last three to five years, and see how your performance and fees compare with the market average. You don't need to be at the top, but there are a few funds that are consistently at the bottom.”
Carlyon says that the quarterly report from Morningstar offers a decent barometer of how different funds are performing and whether it might be a good time for you to switch to a different provider.
It’s always important to remember, however, that past performance isn’t always an indication of how things might go in the future. Market trends can certainly change from year to year.
Sleeping at night
A long-term investment strategy will only work if you can actually stick to it. If you’re hooked to your app and feel jittery every time there’s a market wobble, then you probably won’t be able to commit to your fund over the long term.
Kernel Wealth founder Dean Anderson says investors need to ensure they aren’t tempted to constantly change things when the numbers aren’t doing exactly what they expect.
'The most important lesson to take from KiwiSaver is to resist the urge to chop and change your strategy or react to short-term market movements,” he says.
“By automating your investments and ignoring the daily noise, you allow time and consistency to do the work for you.'
Avoiding the daily noise and ebbs and flows of the market will also help you to sleep better at night.
Taking this long-term view, not influenced by external stimuli, will also enable you to set risk settings appropriately.
“You need to match your risk to your timeline,” says Anderson.
“If your retirement is more than ten years away, then growth or high-growth funds are generally a better fit to capture long-term gains.”
There are various online tools you can use to gauge the difference your fund choice can make to your long-term earning potential.
Send a message with your vote
Asked what he thought the average person could do about climate change, the economist Mark Jaccard told Wired magazine the best thing we could do is vote for climate-sincere politicians.
You can ride the bus, put solar panels on your roof and choose an EV, but the most significant changes come from policy.
“Yes, it's what you do personally, but it's really also making sure the policies are in place so that everyone's doing it,” Jaccard said.
The same thing applies to KiwiSaver and our retirement.
As we head into the election year, keep an eye on the policy ideas being offered by the different parties. There are still many tweaks and changes that could be made to KiwiSaver that could make a huge difference in the years to come.
Contribution rates, whether the system is voluntary or compulsory, the continued validity of total remuneration clauses, and the age of retirement are all fundamentally important, but they are dependent on policy changes from politicians who are taking these things seriously.
Our politicians have already released some details on the changes they’d like to make, and there’ll be more to come.
Voters this year will have a rare opportunity to have a say in what they think our retirement system should look like in the coming decades. Choose carefully, because the opportunities to make meaningful change don’t come around all that often.