Advice matters
What happens to your KiwiSaver plan when you turn 65?

Whether retirement age is just around the corner or some years away, you may be wondering what happens to your KiwiSaver plan when you hit age 65. If so, read on to learn more about your options.

The power of choice

Unlike many people think, the fact that you can finally access your KiwiSaver savings doesn’t mean you have to withdraw all of your savings at once.

You have choice. By leaving some (or all) of your funds invested, there’s potential for them to grow. Of course, if you do choose to leave them invested in your KiwiSaver fund, it’s important to consider your risk profile.

Some people opt to de-risk their entire KiwiSaver portfolio, whereas others opt for a more nuanced approach and spread their investment across several KiwiSaver funds, with different risk levels based on when they plan to access the money. For example, if you don’t plan to withdraw a certain amount for 10 years or more, you could consider putting that into a higher-risk KiwiSaver fund.

Withdrawing your funds

Upon turning 65, you have different withdrawal options, including:

  • One big lump-sum withdrawal – This gives you instant access to all the savings that you, your employer, and the Government have made over the years, plus returns. You can use this sum as you like and need – to clear debts (e.g., your mortgage), dive into other investment avenues, or even fund that vacation you’ve always dreamed about. However, keep in mind that the onus of managing this sum falls entirely on you. Make sure you carefully plan your moves to ensure long-term sustainability.
  • Regular withdrawals – Think of this as setting up a salary for yourself. By keeping your KiwiSaver account active, you can set up weekly, fortnightly, or monthly withdrawals. The benefit of this option is that it makes planning over the long term easier. This steady income will supplement NZ Super payments and any other pension or passive income you may have.
  • As-you-go withdrawals – Another approach[AM1]  would be to withdraw funds whenever a need arises. This option allows your KiwiSaver money to remain invested, potentially growing, until you decide to tap into it. However, it also requires a fair share of planning to ensure that you’re not depleting your savings too rapidly, as growth is not guaranteed.

Contributing beyond 65

Some Kiwis choose to continue to work – often in a part-time capacity – after they reach retirement age. If that’s your case, you can still make personal contributions to your KiwiSaver plan.

You won’t receive annual Government contributions, and your employer is no longer required to make contributions (though some employers may decide to continue, so it’s worth discussing this with them).

Any questions about your KiwiSaver plan?

In essence, KiwiSaver can be a flexible and comparatively low-cost option to keep investing in retirement. How you decide to use it is up to you and your goals.

If you have any questions, get in touch with a SHARE adviser today. We can help you run your numbers and explore your options.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.