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The End of KiwiSaver?


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Does KiwiSaver end at 65? If not, what are our options? Are we in fact, being offered the keys to our future? Here is some information about KiwiSaver after 65.

When we turn 65, we have a number of options with KiwiSaver. We could choose to close our KiwiSavers and withdraw all the money, but what then? After being invested and (hopefully) getting better returns than cash, where is our KiwiSaver money going to end up, and is that really the right thing to do? Some people choose to spend their money on a holiday, doing up the house, or repaying the mortgage. If this is going to happen, it is important to be aware of which this will mean for our retirement incomes, as without a top up from KiwiSaver, we may be solely reliant on the NZ Super. For a lot of people, this would be a big drop in income from previous salaries.

Another option is to stay invested in KiwiSaver and call on it for lump sums as things arise. If we have enough income to live on comfortably from other sources, KiwiSaver funds could be used to replace cars, maintain a property, or assist family as required. After the age of 65, withdrawals are relatively straightforward, so there is flexibility.

We could also choose to draw a regular income from KiwiSaver. This could be an amount which allows an income to be paid out until we are 90 for example, or it could be a fixed amount each week until the money runs out. Withdrawals from KiwiSaver are not treated as income and so are not taxable. All the tax on income will have been paid already within the KiwiSaver before the money is paid out to you.

After the age of 65, we can continue to contribute and save into our KiwiSavers. If we don’t need the money or are going to continue to work beyond the age of 65, it can be quite a flexible savings vehicle (although consideration would need to be given to the amount of risk being taken within the KiwiSaver fund).

I have had a number of discussions with clients around the risk within their KiwiSaver, and most people will automatically assume that KiwiSaver stops at 65 and this is the time frame they work to when considering the risk they are willing to take with their money. If you are looking to take a regular income from KiwiSaver, which could continue until the age of 90, then KiwiSaver WON’T stop at 65. De-risking completely at 65 would leave your balance open to erosion from inflation for 25 years! It is incredibly important therefore, to have an idea of how you might use your KiwiSaver (if at all) after the age of 65 and ensure that your choice of investment strategy is appropriate for your requirements. Get advice if you need it or keep revisiting your risk profile over the years to make sure you’re on track.

A caveat to the above would be if you joined KiwiSaver between the age of 60 and 65. If this is the case, then no withdrawals can be made from the KiwiSaver until you have been a member for at least 5 years. This could mean that the money in KiwiSaver is not accessible until the age of 69. For everyone who joined before the age of 60, the funds are accessible at age 65 currently.

Nothing in this article should be considered financial advice, it is intended for informational purposes only. If in doubt about your personal circumstances, seek financial advice. A disclosure statement is available free of charge and on request.