KiwiSaver After 65: Keep Contributing or Withdraw?

Turning 65 is a big milestone for KiwiSaver members, but plenty of people get confused about what actually happens next. The short version: your KiwiSaver balance becomes accessible, but nobody forces you to touch it. You can withdraw the lot, take bits out as you need them, leave it all invested, or any combination of those options. There is genuinely no rush, and making a hasty decision with a large sum of money is one of the most common retirement mistakes we see.

What Actually Changes at 65

Once you hit the KiwiSaver eligibility age of 65, you gain the right to withdraw your full balance. This does not happen automatically - you need to apply to your provider. If you do nothing, your money stays invested exactly as before, which is perfectly fine. The only thing that definitively changes on your 65th birthday is that the government contribution stops. That annual top-up of up to $521.43 (the member tax credit, based on contributing at least $1,042.86 per year) is no longer available to you. So if you are approaching 65, it is worth making sure you have contributed enough in that final year to claim the full amount before the cut-off.

Why You Might Keep Contributing After 65

A lot of Kiwis keep working past 65 these days, whether by choice or necessity. If you are still employed and contributing to KiwiSaver, your employer is still required to match your contributions at a minimum of 3%. That is free money going into a professionally managed fund, and there is no age limit on employer contributions. Even without the government top-up, having your employer put in 3% on top of your own contributions is a genuine benefit that most other savings vehicles cannot replicate.

Your fund also keeps earning returns while it is invested. A growth or balanced fund that averages 5-7% annually will typically outperform what you would get from a term deposit, though obviously with more ups and downs along the way. If you do not need the money right now, there is a solid argument for letting compound returns do their thing for a few more years. Retirement can easily last 25 to 30 years, so having some of your money in growth assets is not as risky as people sometimes assume.

Reasons to Withdraw Some or All of It

The most obvious reason to withdraw is that you actually need the money. If you are retiring and KiwiSaver is your main savings pool, then drawing it down for living expenses is exactly what it was designed for. Some retirees also prefer to consolidate their finances - pulling KiwiSaver out and combining it with other savings or investments so everything is managed in one place. KiwiSaver fees vary quite a bit between providers, and in some cases you can find lower-cost investment options outside the KiwiSaver framework.

There are also estate planning considerations. KiwiSaver balances are paid to your nominated beneficiaries (or your estate if you have not nominated anyone), and some people prefer to gift money to family while they are alive rather than leaving it locked up. Others simply want the psychological comfort of having full control over their money after decades of it being locked away. These are all legitimate reasons, and none of them is wrong.

How Withdrawals Work in Practice

You have three main approaches once you are eligible. A full lump sum withdrawal gives you everything at once, which offers maximum flexibility but also means you need a plan for where that money goes. Leaving a large sum sitting in a savings account earning next to nothing is a poor outcome, and we have seen people fritter away significant balances simply because the money was too accessible.

Partial withdrawals are often the smarter approach for most retirees. You take money as you need it and leave the rest invested. Most KiwiSaver providers make this straightforward through online portals, and it means your remaining balance continues to earn returns. Some providers also offer regular payment options that effectively turn your KiwiSaver into a fortnightly or monthly income stream, which can be helpful for budgeting. Check the fees on these arrangements though, because they vary.

Getting Your Fund Type Right

If you are planning to leave money in KiwiSaver for several more years, think about whether your current fund type still suits your situation. Someone who will not touch their balance for another decade might be perfectly comfortable in a growth fund. But if you are planning to draw the money down over the next two or three years, shifting to a balanced or conservative fund reduces the risk of a market dip hitting you right when you need to withdraw. This is the classic "sequencing risk" problem - a 20% market drop does not matter much if you have 15 years to recover, but it is devastating if you need that money next month.

A sensible middle-ground approach is to keep enough in conservative assets to cover your spending for the next two to three years, and leave the rest in growth assets for the longer term. This gives you a buffer against short-term volatility while still benefiting from higher long-term returns.

Tax Treatment of Withdrawals

One genuinely good piece of news: KiwiSaver withdrawals are not taxed. Your contributions were made from after-tax income, and the fund's investment returns have already had tax deducted along the way (via the PIE tax regime). So when you withdraw, whether as a lump sum or in instalments, the money is yours free and clear. This makes KiwiSaver withdrawals more tax-efficient than drawing down many other types of investments.

Switching Providers Still Makes Sense

Just because you are over 65 does not mean you are stuck with your current provider. If your fund has high fees or has been consistently underperforming, switching is still an option and the process is straightforward. Compare providers on sorted.org.nz and look at both fees and long-term performance before making a move. Even small differences in fees compound significantly over a multi-decade retirement.

The Bottom Line

There is no single correct answer here, and anyone who tells you otherwise is oversimplifying. The right approach depends on whether you are still working, how much you have saved, what other income sources you have, and what you want your retirement to look like. If you are unsure, talk to a financial adviser who can look at your full picture. The one thing we would strongly recommend is not making a rushed decision - your KiwiSaver is not going anywhere, and taking a few weeks to think it through properly will serve you far better than withdrawing the lot on day one because you can.