KiwiSaver at 65: what changes, what to do.

What 65 actually unlocks

From your 65th birthday (or from when you've been a KiwiSaver member for at least five years, whichever is later for some 60+ enrolees), you can withdraw any amount of your KiwiSaver balance at any time. The withdrawal is paid to your bank account, no tax is deducted on the way out (KiwiSaver is taxed inside the fund), and no penalty applies (KiwiSaver at 65).

That's the headline change. But there are three quieter changes that catch most retirees off guard.

Change one: employer contributions become optional

If you're still working past 65, employer contributions are no longer compulsory for your employer. Your employer can keep contributing if they want to, but they're not required to under the KiwiSaver Act. In practice, many employers do continue, especially in formal employment with collective agreements. But some employers stop the moment you turn 65, which can mean a 3% pay cut you didn't see coming.

What to do: check your employment agreement, and have the conversation with payroll. If contributions are stopping, ask whether the employer is willing to instead pay the equivalent as salary, which keeps your take-home whole.

Change two: the Member Tax Credit stops

The Government's contribution to KiwiSaver members under 65 is $0.50 per $1 of your own contributions, capped at $521.43 per year (you need to contribute $1,042.86 of your own money to get the full $521.43). At 65, this stops. The contribution still goes into the fund up to the date of your 65th birthday, pro-rated for the partial year.

What to do: if you're a few months short of 65, make sure you've contributed enough during that partial year to capture the full available portion of the credit. If you're a casual or part-time worker, this can mean a one-off voluntary top-up before your birthday.

Change three: contributions remain tax-advantaged at PIR rates

KiwiSaver investment returns are taxed inside the fund at your Prescribed Investor Rate (PIR), which for most retirees is 17.5% or 28%. That's lower than the marginal income tax rate that would apply if the same money sat in a regular term deposit or share portfolio outside KiwiSaver.

What to do: don't lump-sum your KiwiSaver out the day you turn 65 unless you have a specific purpose for the money. Leaving it in the fund means it continues to grow at PIR-favoured rates, which over a 20-year retirement is meaningful. Most retirees we work with leave KiwiSaver alone and draw it down progressively as needed.

What about superannuation?

NZ Superannuation is separate from KiwiSaver. Super is the universal age pension paid by the Government from age 65, currently around $530 per week for a single person living alone (always confirm the current rate; it's adjusted with inflation). You receive Super regardless of your KiwiSaver balance. You don't have to retire to receive it. You can be working full-time at 67 and still receive Super (Work and Income, NZ Super).

The interaction with KiwiSaver is: Super is the floor, KiwiSaver is what you draw down on top of Super to fund the lifestyle you want.

The draw-down question

This is the conversation that takes 90% of the time in a retirement planning meeting. The textbook approaches:

• 4% rule: withdraw 4% of the balance in year one, then adjust that amount for inflation each year. Historically lasts 25-30 years across most market conditions, including the bad ones.
• Bucket strategy: keep 2 years of spending in cash, 3-5 years in conservative, the rest in balanced or growth. Refill the cash bucket from growth in good market years.
• Annuity: use part of the balance to buy an income for life from an annuity provider. Less common in NZ than overseas; only a few providers offer it here.

None of these is universally right. The right answer depends on whether you have a partner, whether you own your home outright, whether you have other assets, and what your real living costs look like (not the headline figure, the real number including the holidays, the cars, the unexpected health expenses).

Mistakes we see at 65

1. Lump-summing out 'because you can'. Tax wrapper lost, growth potential lost, behavioural risk of spending it.
2. Switching to conservative on the 65th birthday. If your retirement is 25 years long, half of the balance still has a long time horizon. Going 100% conservative locks in a lower return profile when you don't need to.
3. Not noticing employer contributions stopped. If you're working past 65, payroll change can quietly subtract 3% from your retirement compounding.
4. Forgetting Super is taxable. NZ Super is paid at the M tax code by default but is taxable income. If KiwiSaver withdrawals push your total income into a higher bracket, the marginal tax on Super can climb.

What we do for clients turning 65

We sit down 12 months before, and then again 3 months before the 65th birthday. The first conversation maps the picture: assets, liabilities, expected Super income, KiwiSaver balance, expected expenses. The second translates that into a draw-down structure for the first 5 years of retirement, with the rest reviewed annually. Most of the work is behavioural; the maths is the easy part.