When being your own boss means fending for yourself
Tuesday, 21 July 2026
Martin Hawes is a financial writer and presenter, and has written 25 personal finance books. He writes a weekly column.
OPINION: Almost all my working life I have been self-employed and, like all self-employed, I know that self-employment is not always plain sailing.
The idea for most of the self-employed is to be our own boss. However, for many of us we end up with multiple bosses: the bank, a regulator, the IRD, our customers, a partner who would like us home at a more reasonable hour. We are also a forgotten group when it comes to personal finance.
I am not complaining – I would do it all again just the same way. However, my 50 years of living on my wits has made me very aware of the minuscule incentive to save for the self-employed. The only incentive for self-employed KiwiSavers is $260 a year from the government; that is worth filling in a form and contributing $1043 to get, but it won’t build a good retirement.
It was therefore with some interest that I had a look at the National Party’s new policy on compulsory KiwiSaver. To my surprise, the self-employed get a mention: the self-employed would have to pay the employees’ contribution which from July 2028 will be 4% of their income.
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At the same time, employees will be saving 8% (the employee’s 4% with matched money from their employer also of 4%). Meanwhile the self-employed save half of that (that won’t secure retirement either).
In Australia, which has had compulsory super for 30 years, there are tax incentives for some contributions including for many of the self-employed. I did not look very hard in the National Party policy for tax incentives because I was absolutely sure there would be none.
There is no way round it: the self-employed need to take responsibility for their own retirement savings.
The first way of looking after yourself is to turn your self-employment into a business of value that can be sold when you retire. That is not easy, but some people manage it: many small and medium-sized businesses started very small. There is no reason why your one-person car repair self-employment cannot be scaled up and become valuable. (Older readers may remember the James Wattie story.)
To turn self-employment into a decent sized, saleable business will require good management systems and the hiring of staff. Hiring and managing staff is usually the biggest headache. However, a proper business (as opposed to self-employment) runs whether you are present or not. Remember that McDonald’s is operated by teenagers via some very good training systems.
Even a small business may be saleable for good money if it has good management systems, a point of difference, loyal customers, and well-trained staff.
If you cannot do this - perhaps it is too risky or you cannot find the capital - you may have to be content to remain self-employed. That will mean you need to save for retirement. This is not easy: self-employment usually means variable, lumpy income.
The best way to save when you have irregular income is to calculate a percentage of your income that can be saved and to put that to savings as soon as you receive any payment from a customer.
This is paying yourself first. The amount that you put to savings might take some experimentation to determine the right amount. However, once you have it, putting that percentage to savings every time you receive a payment really does make saving automatic.
Self-employed people should put $1042.86 to KiwiSaver so that they get the government contribution of $260. However, they should not put more than that in; there are no further benefits, and you need to be aware that money put incan’t be withdrawn until you retire or buy your first home. The self-employed frequently strike lean times and you cannot get help from your locked-up KiwiSaver funds.
Instead, excess savings beyond the $1042.86 should be put into another investment account that does not lock up your money. Most KiwiSaver providers have these funds that you can draw on if you have to.
You shouldn’t withdraw money from retirement savings unless it is absolutely necessary. Compound interest only works if money is left undisturbed – break an investment and you break the magic of compound interest.
Nevertheless, when you are self-employed you are at the whim of the economy and its volatility. Even though your savings are earmarked for retirement, at times you may have little choice but to draw on them. That’s undesirable but sometimes needs must: and with no other choice, you will have to start saving over again. That is far from ideal, making another element of difficulty for the lives of the self-employed.
Martin Hawes is not a financial adviser and the information and opinions here should not be taken as financial advice.