When you turn 65, there are a lot of options around how you use your KiwiSaver fund to support you, but the change can be daunting. What are the rules for contributing? How can I use that money? Do I need to take out all my funds from my KiwiSaver fund in one go? Contrary to popular belief, there’s no need to immediately withdraw all the money from your KiwiSaver account; in fact, you can even continue to keep on contributing.
“Leaving funds in your account allows it to continue to be managed by your provider, so your money keeps working for you, and you can manage your savings instead of letting them sit idle,” says AdviceFirst adviser Tom Kissel. “Your KiwiSaver funds will continue to earn interest for the remainder of your life, retired or not. “
Tom says you can keep contributing part of your wages—if you’re still working—and make lump sum payments to the fund when you’re able to do so, all without any of the penalties that may be associated with savings accounts. If you require partial withdrawals from your fund you can do this, and certain fund providers will also let you set up direct payments from your KiwiSaver fund so you can pay yourself a regular income.
However, it’s worth keeping in mind that employers aren’t legally obligated to contribute to your KiwiSaver fund if you are still working, and you no longer have access to Government Contributions.
“This means the ball is in your court when it comes to the growth and stability of your investment, and it’s more important than ever to make sure you do the research and choose the right fund for this exciting new phase of your life. For example, you may want a fund with high proportions of cash and fixed investment, which is less risky than something with bigger highs and lows over time; or you could be interested in making high returns to top up your savings while you supplement your income elsewhere. Whatever your plan, picking the right fund for you is the vital first step,” says Tom.
“Turning 65 isn’t necessarily the end of your relationship with KiwiSaver, in fact, it can be a very lucrative ongoing partnership. But everyone has different retirement and savings goals, as well as different attitudes to risk; it all depends how you want to spend your retirement,” says Tom.
If you need help navigating KiwiSaver after 65, we can help. Contact one of our advisers today and get a personal retirement strategy review to see how your money can work smarter for you. Simply call 0800 438 238 or email letstalk@advicefirst.co.nz
