At 40, you have approximately 25 years until the KiwiSaver qualifying age of 65. You’re past the peak growth-seeking phase but still have a long enough runway that a growth or balanced fund is appropriate for most people. Here’s how to think about it.
The Short Answer
A growth fund is still appropriate for most 40-year-olds. 25 years is a long investment horizon. A balanced fund is reasonable if your risk tolerance is lower. Conservative at 40 is almost certainly too cautious — it will cost you significantly over the remaining 25 years.
Fund Type by Situation at 40
| Situation | Recommended fund |
|---|---|
| Stable income, 25 years to retirement | Growth |
| Moderate risk tolerance | Balanced |
| Planning to retire early (55–60) | Balanced (consider shifting further over time) |
| First home purchase: 5+ years away | Balanced to growth |
| First home purchase: 1–3 years away | Conservative |
| Behind on retirement savings, need to catch up | Growth (more return potential) |
The Return Gap Over 25 Years
| Fund type | Approx. return | Balance at 65 (starting $40,000, $70k salary, 4% + 3%) |
|---|---|---|
| Conservative | 3.5% | ~$310,000 |
| Balanced | 5.5% | ~$440,000 |
| Growth | 7.5% | ~$620,000 |
Illustrative only. Does not account for salary growth, tax, or fee variation.
At 40 with 25 years ahead, the gap between balanced and growth is around $180,000 — a significant difference. Growth remains the mathematically stronger choice unless your personal circumstances argue otherwise.
The Catch-Up Opportunity at 40
Many 40-year-olds find their KiwiSaver balance lower than expected — due to years at the minimum contribution rate, a period on a savings suspension, time overseas, or simply not engaging with the account. The good news: 25 years is still enough time to substantially improve outcomes.
Approximate averages for 40-year-olds (IRD data, 2025): $40,000–$55,000. If your balance is below this, you’re not too late — but action now compounds far more powerfully than action at 50.
Catch-up strategies:
- Increase contribution rate — moving from 3% to 6% on a $70,000 salary adds $2,100/year in employee contributions alone
- Voluntary lump sum contributions — any windfall (bonus, inheritance, property equity) can be deposited directly with your provider
- Maximise MTC — ensure you contribute at least $1,042.86/year to claim the full $521.43 government top-up
- Switch to growth fund — if you’re in balanced or conservative without a specific reason, shifting to growth adds significant expected return over 25 years
The full KiwiSaver in your 40s guide covers each of these strategies in detail.
When Should a 40-Year-Old Start De-Risking?
The conventional glide path for a 40-year-old:
| Age | Recommended fund |
|---|---|
| 40–50 | Growth (or balanced if moderate risk tolerance) |
| 50–55 | Balanced |
| 55–60 | Balanced to moderate |
| 60–63 | Moderate or conservative |
| 63–65 | Conservative |
At 40, you’re at the beginning of this journey. The de-risking phase is still 10+ years away. The costly mistake is de-risking at 40 by moving to conservative or balanced prematurely — you sacrifice a decade of growth-fund compounding.
Provider Considerations at 40
Fees matter significantly over a 25-year horizon. On a $40,000 balance growing at 7.5% with ongoing contributions:
| Provider | Growth fund fee | 25-year fee impact (approx.) |
|---|---|---|
| Simplicity | ~0.31% + $30/yr | Low — saves ~$60,000 vs 1% fee provider |
| Kernel | ~0.25% + $60/yr flat | Very competitive at higher balances |
| Milford | ~1.05% | Higher but active management; historically competitive after fees |
| ANZ Growth | ~1.06% | Convenience but notable fee drag over 25 years |
| Booster | ~0.50–0.65% | Mid-range; solid active/passive hybrid options |
At $40,000 balance, a 0.75% fee difference costs about $300/year — but that $300 compounded at 7.5% over 25 years becomes roughly $15,000 in lost returns. Fees matter more at 40 than at 30, because the balance is higher.
Risk Tolerance at 40: The Emotional Reality
At 40, some people shift their emotional relationship with market risk — particularly if they’re now homeowners with mortgages and dependants. A paper loss on a growing KiwiSaver balance feels more real than it did at 25.
This is normal — but it shouldn’t push you into an overly conservative fund. The solution is:
- Keep your KiwiSaver in growth or balanced
- Maintain an emergency fund separately so market swings don’t affect your day-to-day finances
- Remind yourself that short-term volatility is irrelevant to a 25-year investment
If you’re genuinely unable to tolerate seeing your balance fall 15–20% in a bad year, balanced is an acceptable compromise — but understand that you’re giving up meaningful expected return in exchange for a smoother ride.
Lifecycle Funds as an Alternative
Some providers offer lifecycle funds that automatically shift your allocation from growth to conservative as you age — removing the manual decision at each life stage. Examples include:
- ANZ OneAnswer Lifetimes — shifts from growth to conservative between ages 55–65
- Fisher Funds LifeSaver — similar glide path
For 40-year-olds who don’t want to actively manage fund type, lifecycle funds are a reasonable option. The trade-off: they often have higher fees than DIY passive options, and the glide path may not match your specific situation (e.g., if you’re planning early retirement or have other assets that reduce the need for de-risking).
Two Scenarios for 40-Year-Olds
Scenario A: On track, no catch-up needed Sarah, 40, earning $90,000. KiwiSaver balance $55,000. Homeowner. Contributing 4%.
- Fund: Growth — 25-year horizon; stay in growth until 50
- Consider increasing to 6% to accelerate balance growth
- No major changes needed; review at 50
Scenario B: Behind, needs to catch up David, 40, earning $75,000. KiwiSaver balance $18,000. Spent 4 years overseas. Contributing 3%.
- Fund: Growth — needs maximum expected return to close the gap
- Increase to 8% contribution rate immediately
- Set up an automatic voluntary payment of $50–$100/month on top of payroll
- Target balance of $100,000+ by age 50
In both cases, growth fund is the right choice. The difference is contribution strategy.
Key Actions at 40
- Confirm your fund type matches your 25-year horizon (growth is appropriate for most)
- Check your contribution rate — consider increasing to 6% or more
- Verify your PIR rate is correct (at higher balances, overpaying PIR costs more)
- Compare your balance against the average KiwiSaver balance by age
- Review your provider’s fees — a 25-year horizon makes fee differences very significant