Seven KiwiSaver considerations for the over-65s
How to manage your investment post-retirement age
Life over 65 is much different now than it was a decade or two ago, with Kiwis living and working longer.
As New Zealanders enjoy a more active ‘retirement’, withdrawing their entire KiwiSaver fund the moment they turn 65 may not be the best option. Here are seven key KiwiSaver considerations for those over 65:
1. KiwiSaver inclusion rules
KiwiSaver used to be closed to over 65s. But since July 2019, people over the official retirement age can now open a KiwiSaver account.
Though employers aren’t required to pay into any KiwiSaver account for over 65s, and the government contribution doesn’t apply, it is wellregarded as a managed fund investment option since it is overseen by the Financial Markets Authority.
Returns over 10 years, on a Balanced fund, have averaged around 8 per cent p.a. after fees and tax, making it a more attractive option for many than a low-interest rate term deposit.
“The reality is you need to take some risk to earn higher returns,” says Pathfinder CEO John Berry.
2. Life expectancy
Kiwis are living longer, with median life expectancy for men around 78, and women 83.
As you live longer, you’ll also need your funds to last longer. KiwiSaver provides an opportunity to continue saving and investing even after you turn 65.
Tip: check your last KiwiSaver annual statement to see how much you may receive on a weekly basis after 65. Will it be enough to supplement your pension and savings?
3. Health is wealth
As we age, we face inevitable health problems including declining mobility and cognitive function and increasing vulnerability. Having a financial buffer to cover those eventualities is wise.
The health care system in New Zealand is comparatively generous but covers mainly urgent issues. Consider keeping a portion of your KiwiSaver invested as a cushion for health care.
4. Diversification
A golden rule of investment and growing wealth is diversification - the art of investing your money across different sectors, countries and asset classes - to minimise risk and protect against sharp losses.
Most KiwiSaver funds are structured as diversified savings portfolios, meaning your money won’t be exposed to a single sector.
“Once you’ve turned 65, you want to avoid big investment losses because it’s really hard to make up those losses,” Berry says.
5. Leaving a legacy
If you don’t need some or all of it, leaving your KiwiSaver fund invested can serve as a legacy both for your loved ones, as well as the planet if you’ve taken an ethical approach to investing.
An ethical provider like Pathfinder goes beyond
aiming for returns significantly higher than term deposits — it makes careful, active choices about where to invest member funds, taking into account environmental, social, and governance factors when evaluating options. It’s not only about risk and return, but also about impact.
6. Partial withdrawals
A one-time, lump sum withdrawal when you reach the age of 65 isn’t your only course of action. If you want to keep your funds growing, you can:
• Leave the money invested in KiwiSaver, if you
don’t need it.
• Set up partial regular withdrawals that form your income and allow the rest of your funds to remain invested.
• Set up periodic withdrawals to supplement your
NZ Super.
7. The “real” retirement age
Many Kiwis aren’t slowing down, working well into their 70s and even past their 80s. If you’re not the retiring type, continuing your KiwiSaver contributions may help your funds build up faster.
If you’re unsure which fund to invest in, get professional financial advice. Pathfinder offers free financial advice to its KiwiSaver members, helping them determine what their risk tolerance is and what fund they’re best invested in.
“You want your retirement years to be enjoyable and stress-free,” Berry says. “You only get one retirement, so you want to get it right.”
Join Pathfinder’s KiwiSaver Plan. It’s an ethical investment option that leaves the planet and your retirement fund in better shape.
Pathfinder Asset Management is the issuer of the Pathfinder KiwiSaver Plan. For a Product Disclosure Statement visit path.co.nz. The article above should not be construed as personalised financial advice. We recommend you consult with a financial advisor regarding your investments.