Year after year, you have watched your KiwiSaver balance grow. At 65, the account finally unlocks, and every dollar is now yours to spend or reinvest. The freedom is exciting, yet the choices can feel overwhelming. This guide outlines the main strategies New Zealand retirees use to turn KiwiSaver savings into a reliable income stream while protecting long-term security.
Confirm Your New Rules of the Game
Before touching the balance, note three key changes that kick in once you reach 65:
- Contributions become voluntary – You can keep adding money, but employer matching may stop unless offered voluntarily.
- Government member-tax credit ends – After 65, no further government contributions arrive.
- Withdrawals are tax-free – New Zealand has no capital-gains tax on KiwiSaver, so amounts you take out will not be taxed.
With these settings in mind you can design a drawdown plan that suits your lifestyle and risk tolerance.
Pay Off Expensive Debt First
Nothing sabotages retirement cash flow like high-interest borrowing. If you still carry credit card balances, personal loans or remaining mortgage payments, using part of KiwiSaver to clear them often delivers an immediate, risk-free “return” equal to the interest rate you would have paid. The mental freedom of owning your home debt-free can also make budgeting easier once superannuation becomes the main income source.
Decide How Much Risk to Keep
Many retirees shift their entire balance into a conservative fund and call it a day. That may be safe in nominal terms, yet it exposes your purchasing power to inflation. Ask yourself:
- How long will the money need to last? NZ life expectancy sits above 80, so a 65-year-old could be planning for 25-plus years of spending.
- How much of the balance will be spent in the next five years? Short-term needs belong in cash or term deposits; money for years 10-25 can stay invested in balanced or growth assets to outrun inflation.
A simple “bucket” approach works well: one year of spending in a cash fund, two-to-four years in conservative income assets, and the rest in a balanced or moderate growth option. Refill the cash bucket annually by selling units from the longer-term buckets.
Choose a Withdrawal Method
A. The 4 Percent Rule
Withdraw 4% of the portfolio in year one, then lift the dollar amount by inflation each year. Research shows this rate has a strong chance of lasting 30 years in a diversified mix of shares and bonds. For example:
- Balance at 65: $400,000
- Year-one draw: $16,000 ($1,333 a month)
- Year-two draw: $16,480 if inflation runs at 3%.
B. Fixed Regular Payments
Many providers let you schedule fortnightly or monthly payments. Calculate the annual total you need, then set automatic withdrawals. Review each year so you do not deplete the account faster than planned.
C. Lump-Sum Withdrawals
Ideal for large one-off goals such as a campervan or home renovation. Take care not to erode too much capital early on, which could leave the remaining balance unable to recover from market dips.
Consider Professional Income Products
New Zealand offers a limited range of retirement income funds and annuity-style solutions. Typical features include:
- Regular distributions credited to your bank account.
- Professional asset management behind the scenes.
- Higher fees compared with a standard KiwiSaver fund.
If you value simplicity and predictable cash flow, assigning a slice of your balance to an income fund can be worthwhile. Always check the provider’s credit strength, fee schedule, and surrender conditions before committing.
Keep Working? Keep Contributing
A growing number of Kiwis choose part-time work well into their seventies. If your employer is happy to continue KiwiSaver deductions (and possibly matching contributions), topping up the account while you draw a modest pension can substantially lengthen its life. Even an extra $100 a week added for five years can push out the danger zone of running out of money by a decade or more.
Blending Approaches for Flexibility
There is no rule saying you must pick one method forever. Many retirees combine strategies:
- Stage 1 (age 65-70): Continue part-time work, leave KiwiSaver mainly invested, withdraw only to cover big purchases.
- Stage 2 (age 70-80): Switch to regular payments that supplement NZ Super, adjust risk profile slightly lower.
- Stage 3 (age 80+): Move most of the balance into cash and conservative funds for ease of access, keep a small growth sleeve as an inflation hedge.
Review the plan each birthday or at major life events such as downsizing your home, major health changes, or the passing of a spouse.
Set Up an Estate Plan
Once you’ve started withdrawals, your KiwiSaver doesn’t automatically transfer to your partner if something happens to you. To avoid delays:
- Make sure your will is up to date.
- Record your KiwiSaver provider and account number in your estate documents.
- Discuss with your solicitor if setting up a family trust or gifting strategy makes sense.
Practical Next Steps
- Check your provider’s retirement withdrawal form – complete the statutory declaration early so funds are ready when you need them.
- Book a review – our financial advisors can model your personal balance under different drawdown rates and market scenarios, then recommend a mix of buckets and funds that balances growth with stability.
Closing Thoughts: Make The Most Out Of Retirement
KiwiSaver was designed to give you choices, not rules, at retirement. The best plan aligns with your health, lifestyle goals, family commitments and attitude toward market swings. Start by clearing costly debt, set an annual cash-flow target, pick a sensible bucket strategy, and revisit it every year. A few smart moves now can turn your KiwiSaver into decades of freedom and support the people who matter most.
Need tailored guidance? Contact the Earnslaw Goodlight team in Cambridge or book an online consult. Our Kiwisaver advisors will turn that hard-earned balance into the life you imagine.
