Getting the most out of KiwiSaver after 65
Not only does the golden age of 65 bring with it a Gold Card, superannuation payment from the government, and the possibility of retirement; but you also get the option of finally being able to access your KiwiSaver savings, which may have been locked away for over a decade.
But whether or not you choose to withdraw your savings in full, or leave some invested, is up to you and depends entirely on your individual financial circumstance.
"Once you reach 65, it's relatively straightforward to withdraw the money from your KiwiSaver account. At Generate, we try to chat with our members about all their options to help them make an informed decision that will work for them," says Generate KiwiSaver Adviser, Jake Mickleson.
At age 65, KiwiSaver investors can opt to stop contributing to their account and take all of their savings out or withdraw it in parts, leaving some invested and spreading the cash over time.
"Many Kiwis decide to keep the majority of their savings invested, and just draw down a regular weekly amount to their bank account as if they're paying themselves a wage."
If you do stay invested, it's important to remember that once you've turned 65 you won't be eligible for the annual Government Contribution and your employer won't be legally obligated to contribute an additional 3 percent to your account.
"Some employers do choose to continue the 3 percent contribution though, so it's definitely worthwhile having this conversation with them," says Mickleson.
For those approaching retirement age in 2023, global economic uncertainty might be a concern as to the best time to withdraw, with the value of investments volatile.
"We generally recommend choosing a more conservative and less volatile fund as you get closer to withdrawing your savings to reduce major fluctuations in your balance – your adviser can help you identify the most appropriate fund," says Mickleson.
And for those still with a mortgage at 65, the decision on whether to become mortgage-free using your investment is worth exploring.
"It will depend on how much you have in your KiwiSaver account and the size of your mortgage. Being mortgage free is fantastic, but you still need to have some liquid money to live off and subsidise your NZ super allowance from the government – so keeping some funds easily accessible in your account can be a good idea.
"Plus, if you leave some of your savings invested, there is a possibility to take advantage of the movement in the markets and compounding investment returns," says Mickleson.
"We know everyone's situation is different, and that's why we're here to help work out what's right for you. If you're over 60 and starting to think about what you should be doing with your KiwiSaver account when you reach 65, get in touch and have a chat with one of our friendly KiwiSaver advisers."