KiwiSaver at 65: Withdrawal Options Explained

After decades of saving, reaching 65 finally allows you to access your KiwiSaver. But this is not a simple matter of taking all your money out. The choices you make about withdrawing can significantly affect how long your savings last and your quality of life in retirement.

Understanding your withdrawal options before you turn 65 helps you plan effectively for this important transition.

Qualifying For Withdrawal

You can withdraw your full KiwiSaver balance when you turn 65, provided you have been a member for at least five years. If you joined after age 60, you may need to wait until you reach five years of membership even if you are over 65.

There is no requirement to withdraw at 65. Many people leave their funds invested and continue contributing if they are still working. The flexibility is entirely yours.

Once qualified, you can withdraw at any time. There is no deadline or expiry on your ability to access your funds after meeting the eligibility criteria.

Lump Sum Withdrawal

You can withdraw your entire balance as a single lump sum. This gives you immediate access to all your savings to use as you choose.

A lump sum might fund a major purchase like paying off remaining mortgage debt, buying a car, or taking a significant trip. Some people use it to help children or grandchildren with their first home deposits.

However, receiving a large sum requires discipline. Without careful management, the money can disappear faster than expected, leaving you dependent on New Zealand Superannuation alone.

Staged Withdrawals

Rather than taking everything at once, you can make partial withdrawals over time. This approach keeps most of your money invested while you draw down what you need.

Staged withdrawals can supplement your income during retirement. Regular withdrawals of $500 or $1,000 monthly, for example, add to your Superannuation payments.

This approach maintains investment exposure for longer, potentially growing your remaining balance even as you withdraw. However, market volatility means your balance could also decrease.

Leaving Funds Invested

You can leave your KiwiSaver invested after 65 without making any withdrawals. The money continues to grow, and you can access it whenever you choose.

This suits people who do not need the funds immediately, perhaps because they have other income sources or are continuing to work. Leaving money invested maximises potential growth.

You stop receiving the member tax credit after you qualify for withdrawal, even if you continue contributing. The government contribution ceases when you become eligible to withdraw.

Continuing Contributions After 65

If you are still working after 65, you can continue contributing to KiwiSaver. Your employer must also continue their contributions if you choose to keep contributing.

There is no member tax credit on contributions after you qualify for withdrawal. The government contribution stops regardless of whether you actually withdraw.

Continuing contributions while employed adds to your balance and benefits from employer contributions. This can be worthwhile if you plan to work several more years.

Tax Implications

Withdrawals from KiwiSaver are tax-free. This is a significant benefit compared to some other investment types where withdrawals trigger tax obligations.

The tax-free status applies to your entire balance including investment returns. You do not need to declare KiwiSaver withdrawals as income.

This makes KiwiSaver particularly valuable for retirement compared to investments held outside the scheme that may generate taxable income when sold.

Choosing Your Approach

Consider your overall retirement income picture. If New Zealand Superannuation covers your basic needs, staged KiwiSaver withdrawals can fund extras and unexpected costs.

Think about how long you expect to live and your spending patterns. Drawing down too quickly risks running out of money. Drawing too slowly means not enjoying the retirement you saved for.

Many retirees benefit from financial advice when planning withdrawals. A small investment in professional guidance can optimise outcomes over decades of retirement.

Death And KiwiSaver

If you die before withdrawing your KiwiSaver, the balance passes to your estate. It does not disappear or revert to the government.

Nominating beneficiaries helps ensure your KiwiSaver reaches your intended recipients efficiently. Without nomination, it passes through your estate according to your will or intestacy rules.

Consider KiwiSaver as part of your overall estate planning, particularly if your balance is substantial. Professional advice ensures your wishes are clearly documented.