KiwiSaver vs Debt Payoff Calculator NZ

This calculator helps you decide whether spare cash is better put into KiwiSaver or used to pay off debt in New Zealand, by comparing the guaranteed return from clearing debt against the expected return from investing. It is one of the most common money questions, and the answer usually comes down to a head-to-head of rates. Paying off debt delivers a guaranteed return equal to the interest rate you stop paying: clear a credit card charging twenty percent and you have effectively earned a risk-free twenty percent. Extra KiwiSaver, by contrast, offers an expected return that is usually lower and never guaranteed, riding the ups and downs of markets. So when your debt rate is higher than your expected KiwiSaver return, paying the debt almost always comes out ahead. You enter the spare amount, your debt interest rate and your expected KiwiSaver return, and the calculator shows the guaranteed interest you would save by paying the debt, the expected gain from investing instead, and which is ahead. One important caveat sits above this: contribute enough to KiwiSaver first to capture the full employer and government contributions, because that free money beats almost everything. Beyond that minimum, this comparison applies. Returns are not guaranteed; general information, not advice.

Advertise on this page

Spare amount

Debt interest rate

Expected KiwiSaver return

Paying debt wins by $700 a year, and it is guaranteed

first-year benefit of each option

Debt interest saved$1,000

KiwiSaver expected gain$300

Debt saving is guaranteed; KiwiSaver return is expected and at risk. Capture the full employer and government KiwiSaver contributions first. General information, not advice.

How it works

The debt interest saved is the spare amount times your debt interest rate, the return you lock in by clearing that debt. The KiwiSaver expected gain is the spare amount times your expected return, which is uncertain. The calculator compares the two first-year figures and reports which is larger, noting that the debt saving is guaranteed while the KiwiSaver gain is not.

Worked example

With 5,000 dollars spare, paying off debt at 20 percent saves 1,000 dollars of interest for certain, while a 6 percent KiwiSaver return is an expected 300 dollars. Paying the debt wins by about 700 dollars, and it carries no risk.

Related calculators

Debt vs Invest: the general question.
KiwiSaver Calculator: KiwiSaver growth.
Debt Avalanche: clearing debt.
Debt vs Emergency Fund: priorities.
Debt Payoff Strategies: background on this topic.

Data sources: the rates and thresholds on this page are maintained against Inland Revenue. Figures are checked twice monthly.

Frequently asked questions

Should I pay off debt or add to KiwiSaver?

Compare the rates. Paying off debt gives a guaranteed return equal to the interest rate you avoid, while extra KiwiSaver gives an expected but uncertain return. If your debt rate is higher than your expected KiwiSaver return, paying the debt usually wins.

Why is paying debt a guaranteed return?

Every dollar of high-interest debt you clear saves you that interest for certain, with no market risk. A 20 percent credit card paid off is effectively a guaranteed 20 percent return, which few investments can match reliably.

Does employer KiwiSaver money change this?

Contributing enough to get the full employer and government contributions is usually worth it first, because that is free money. Beyond that minimum, extra voluntary KiwiSaver competes directly with paying down debt on the rates alone.