Getting your KiwiSaver retirement ready
Reaching age 65 is a major milestone, but it doesn't mean your KiwiSaver journey is over. Instead, it marks a transition from "accumulation" to "drawdown." To ensure your funds last as long as you do, you need to adjust your strategy.
Here is what you need to know about getting your KiwiSaver ready for retirement.
1. Reassess Your Risk Level
When you are decades away from retirement, market volatility is your friend because it allows you to buy more units when prices are low. However, as you approach 65, large market dips can be harder to recover from.
Decreasing Risk: Many retirees move a portion of their balance into "Conservative" or "Cash" funds. This protects the money they plan to spend in the next 1–3 years from sudden market drops.
Staying Invested: Don’t feel you have to move everything to a low-risk fund. Money you don't plan to touch for 10+ years might still benefit from a "Growth" or "Balanced" setting to keep up with inflation.
2. The 65 Milestone: Unlocking Your Funds
Once you turn 65, your KiwiSaver is "unlocked." This means you have full access to your money, but you are not required to take it out.
The Choice is Yours: You can withdraw the full amount, take out lump sums for specific needs (like a new car or home repairs), or leave it exactly where it is.
Tax-Free: A major benefit is that all withdrawals from KiwiSaver are currently tax-free in New Zealand.
3. Setting Up Regular Withdrawals
Instead of taking a lump sum, most providers allow you to set up a regular "income stream."
Frequency: You can usually choose to have a set amount (e.g., $500) paid into your bank account weekly, fortnightly, or monthly.
Sustainability: This helps you manage your budget alongside NZ Super and ensures you don't spend your entire nest egg too quickly.
4. Changes to Contributions
The financial incentives change once you reach the age of eligibility:
Government Contributions Stop: The annual government "top-up" (Member Tax Credits) ends once you turn 65.
Employer Contributions May Stop: Your employer is no longer legally required to contribute to your KiwiSaver once you reach 65. Some employers choose to continue as a gesture of goodwill, but it is important to check your specific employment contract.
Voluntary Contributions: You can still choose to put your own money into the fund at any time to keep it growing.
5. Important Administrative Steps
Statutory Declaration: Providers require you to complete a one-off statutory declaration when you first turn 65 to confirm your eligibility to withdraw. This may involve getting forms certified by a Justice of the Peace or other authorised figure.
Update Your PIR: Your Prescribed Investor Rate (PIR) is the tax rate applied to your fund's earnings. Since your income might drop in retirement, check if you are eligible for a lower PIR (like 10.5% or 17.5%) to avoid overpaying tax.