Retirement planning for the self-employed
When you work for yourself, nobody is setting aside money for your retirement. That makes planning not just important — but urgent.
New Zealand has a large and growing self-employed workforce. Contractors, consultants, freelancers, sole traders, small business owners — the shape of self-employment varies enormously, but the retirement planning challenge is broadly the same for all of them: there is no employer automatically contributing to a KiwiSaver account on your behalf. If you haven't yet worked out how much you'll need to retire, that's the place to start.
For employees, employer contributions are a significant and largely invisible benefit — effectively free money that compounds over decades. For the self-employed, that benefit simply doesn't exist unless you create the equivalent yourself. Which means the gap between what self-employed New Zealanders need for retirement and what they're actually saving is, on average, wider than for their employed counterparts.
The good news is that the path forward is straightforward once you understand it.
KiwiSaver and the self-employed: what you need to know
Self-employed New Zealanders can join KiwiSaver and contribute voluntarily — but the mechanics work differently than for employees.
There is no obligation to contribute a percentage of income, and no employer matching those contributions. Instead, you contribute whatever amount you choose, whenever you choose. You still receive the government's annual member tax credit — currently up to $256 per year, at 25 cents per dollar contributed, provided you contribute at least $1,042 in the year. But beyond that, the discipline and the amount are entirely up to you.
This flexibility is both the opportunity and the risk. For self-employed people with irregular income, the ability to contribute more in good months and less in lean ones is genuinely useful. But without the automatic nature of payroll deductions, contributions can easily be deprioritised — particularly when cash flow is tight or business demands are high.
The employer contribution gap — and how to account for it
The most important number to understand is what you're missing by not receiving employer contributions. An employee earning the average NZ salary with an employer contributing 3.5% to KiwiSaver accumulates a meaningful additional sum over a career — money that a self-employed person at the same income level simply doesn't receive.
There is no perfect substitute for employer contributions, but there are practical ways to compensate:
- Contribute more yourself. The most direct approach is to set a higher personal contribution rate to account for the absence of employer matching. What that rate should be depends on your income, your retirement timeline, and your other savings — which is exactly what ThatDay can help you work out.
- Treat contributions as a business expense of working. One of the mindset shifts that helps self-employed people build consistent saving habits is treating KiwiSaver contributions not as discretionary but as a fixed cost of running their working life — as automatic and non-negotiable as tax.
- Use good months to get ahead. Irregular income is a feature of many self-employment arrangements. Building the habit of directing a portion of every good month's income straight to retirement savings — before it gets absorbed into spending — is one of the most effective things a self-employed person can do.
Beyond KiwiSaver: other savings options
KiwiSaver is not the only savings vehicle available to self-employed New Zealanders, and for some people it may not be the most suitable one — particularly those who need more flexibility around when they can access their savings.
Managed funds, term deposits, and direct investment all have a role to play in a self-employed person's retirement plan. The right mix depends on individual circumstances, risk tolerance, and timeline. ThatDay's financial services partners are well-placed to help with this conversation for those ready to go beyond the basics.
The spending side of the equation
Self-employed income is often less predictable than a salary, which makes the spending side of retirement planning particularly important. A self-employed person who has developed a clear sense of what their essential spending actually is — as distinct from what gets spent when income is flowing freely — has a significant advantage. They know their floor, which means they can plan more accurately for both lean periods now and retirement later.
This is where conscious spending connects directly to the practicalities of self-employment. Knowing what "enough" looks like on a monthly basis isn't just a philosophical exercise — it's a practical tool for navigating the variability of self-employed income and building retirement security in spite of it.
See your full picture
ThatDay is a free retirement planning platform built for New Zealanders. It works just as well for the self-employed as for employees — showing you what you need to retire on your terms, what you're currently on track to accumulate, and what different savings and spending choices do to that picture.
Its financial assumptions were independently validated by the University of Auckland Business School's Master of Applied Finance programme. ThatDay is free for every New Zealander to use.
See your retirement picture — start your free plan at thatday.co.nz
A note on taking the next step
For self-employed New Zealanders whose situation is more complex — business assets, variable income, questions about when and how to wind down a business — a conversation with a financial adviser is worth having sooner rather than later. ThatDay's financial services partners include advisers experienced in working with self-employed clients, and connecting with one through ThatDay is straightforward.
