What happens to your KiwiSaver when you retire?

3 MIN READ April 3, 2019
Are you heading towards retirement? Or are you just curious about what happens with your KiwiSaver when you retire? We’ve created this handy guide with all of the information you need for retiring with your KiwiSaver, including the new changes for 2019.

As it stands, people over 65 can’t join KiwiSaver or move into a new scheme, and if they join after the age of 60, they’ll need to wait five years before they can withdraw their funds. The new changes that have now been passed and are coming into effect on July 1st this year will allow people over 65 to join the KiwiSaver scheme and will remove the five year lock-in period.

So what happens to my KiwiSaver when I retire?

Firstly, when you retire, it’s important to remember that even if you’re still working, you won’t be eligible for the annual Member Tax Credits from the government. Your employer also doesn’t need to keep contributing, but many do still honour this and continue contributing after you’ve reached 65.

When you turn 65, you can access all of your KiwiSaver funds at any time. Although taking out all of your savings as soon as you’re eligible might seem like an appealing idea, you’ll actually have a few options open to you depending on what your plans are.

Withdrawing all of your savings

This might be your gut reaction, after all you’ve probably saved quite a lot by this point and are looking forward to putting it towards a well-earned holiday.

As it’s your money, you can absolutely use it how you please once you turn 65, but if you do decide to withdraw all of your savings, you’ll need to close your KiwiSaver account and you won’t be able to open another one in future.

Leaving your savings in your KiwiSaver account

There is a common misconception that once you turn 65, you have to withdraw all of your KiwiSaver savings and reinvest them in a term deposit or other savings account. This isn’t true – you can keep your savings in your KiwiSaver account and it’s often a lower cost option compared to other managed funds.

If you’re still working, even just part time, this could be a good option as you’ll still be contributing to your savings. As mentioned above, your employer doesn’t need to keep contributing but some may choose to continue doing this.

If you are planning on leaving your savings in your KiwiSaver account, it’s a good idea to have a chat with a financial adviser to discuss what fund type options are available for you.

Withdrawing some of your savings

This one’s a good compromise – you can still take a trip but keep some savings tucked away for a rainy day. Some providers can offer you regular automatic withdrawal amounts which might be helpful if you’d like to have a bit of extra cash every week without draining your account.

Again, you can still contribute if you’re working, you just won’t be eligible for the Member Tax Credit and it will be up to your employer to decide if they will still contribute too.

If you’re not sure about how to manage your KiwiSaver funds once you’ve hit retirement, come and have a chat with one of our friendly advisers today.


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