Bridging the Gap: Income Before NZ Super

What if you want to retire before 65? Or lose your job in your early 60s? You will need income to bridge the gap until NZ Super starts.

The Gap Problem

NZ Super does not start until 65. If you stop working at 60, you need five years of income from somewhere else.

At $50,000 per year, that is $250,000 you need to fund yourself.

Many people do not plan for this gap, assuming they will work until 65. But redundancy, health issues, or caring responsibilities can force early exit from the workforce.

KiwiSaver Withdrawal

You can access your KiwiSaver from 65 only-the same age as NZ Super. This creates a challenge for early retirees.

The only early access options are significant financial hardship (which has strict criteria), serious illness that is life-threatening, permanent emigration (but not to Australia), or first home purchase (which most early retirees have already used). You cannot simply withdraw KiwiSaver to fund early retirement.

Savings Outside KiwiSaver

This is why savings outside KiwiSaver matter. Term deposits, managed funds, shares, or property provide accessible funds that are not locked until 65.

If you want flexibility to retire before 65, build assets you can access.

Work Options

Part-time work

Reducing to part-time rather than stopping completely extends your working life while giving you more freedom. Even $20,000 per year from part-time work significantly reduces the savings you need.

Consulting or contracting

Your expertise has value. Many early retirees work as consultants, using skills developed over decades. This can be more flexible and often better paid than employment.

Gig economy

Platforms like Uber, Airbnb, or freelance sites provide income opportunities that work around your schedule.

Small business

Some retirees start small businesses-turning hobbies into income or providing services to their community.

Redundancy Planning

If you are made redundant in your late 50s or early 60s, start by calculating how long your redundancy payment will last and do not assume you will find another job quickly. Apply for JobSeeker Support if needed-there is no shame in using this safety net. Review your expenses immediately and reduce discretionary spending. Consider whether to dip into savings or find other income first, and get advice on KiwiSaver to understand your options.

The job market is challenging for older workers. Be realistic about re-employment prospects.

The Jobseeker Bridge

JobSeeker Support is available to those actively seeking work. A single person receives approximately $337 per week, while a couple receives approximately $560 per week. This is less than NZ Super but can help bridge the gap while you look for work or until you turn 65.

Asset testing applies, so substantial savings may affect eligibility.

Partner Income

If your partner is still working, their income can cover household expenses while you are not earning.

This works well if your partner enjoys their work, their income covers essential expenses, and you contribute in other ways such as household duties or childcare. It does not work if your partner also wants to retire or their income is insufficient.

Rental Income

Investment property can provide income before 65. Rental returns are not age-restricted.

However, property requires capital you may need later. Selling an investment property to fund living costs may not be the best strategy.

Consider whether rental income can cover the gap without selling assets.

Drawdown Strategies

If you have savings outside KiwiSaver, plan your drawdown carefully. Start by calculating the gap-years until 65 multiplied by your annual expenses. Then identify which assets to use first, often term deposits or managed funds that are more accessible. Keep some growth assets since you still have a long retirement ahead after 65. And consider the tax implications, as some income is taxed while some is not.

A financial adviser can help optimise your drawdown strategy.

Insurance Considerations

If you are not working, you probably do not need income protection insurance. But consider keeping health insurance since medical events are more likely as you age. Review whether life insurance is still needed for your situation. Trauma insurance can also be valuable as it provides a lump sum for serious illness.

Cancelling all insurance to save money may not be wise if you still have dependents or debts.

Planning Ahead

The best strategy is planning before you need to bridge the gap. Build savings outside KiwiSaver so you have accessible funds. Pay off your mortgage before stopping work to reduce your required expenses. Develop skills for flexible work that you could do part-time or as a consultant. Keep your professional networks active so consulting opportunities remain available. And understand your entitlements so you know what support is available if needed.

Five years is a long time to fund without preparation. Start planning in your 50s for the possibility of early exit from work.