Does turning 65 mean it's time to withdraw the entirety of your KiwiSaver balance?
Retirement can be expensive, especially when there are costs associated with ageing that you might not immediately think of. Hearing aids, home help, house modifications and other unexpected expenses can make a big dent in your bank account.
So how can you continue building your money to pay for these expenses with little to no income?
KiwiSaver is often viewed as an investment for those not yet retired, but are there benefits of joining KiwiSaver after 65? We take a look.
KiwiSaver or money in the bank?
KiwiSaver can provide better returns than a savings account or term-deposit.
“In New Zealand’s current low-interest climate, inflation can eat away at the value of term deposits and savings accounts,” says Melissa Vasta, General Manager – Product and Retail.
KiwiSaver funds have the potential to offer higher returns. You’re also not locked into the terms of one account, meaning you can easily change your fund depending on your timeframe and appetite for risk.
“We’re in an historically low interest-rate environment where money is not returning much in savings accounts and term deposits. Diversifying through KiwiSaver funds instead can help people accumulate more wealth,” Melissa says.
What about flexibility?
The great thing about KiwiSaver for retirees is its flexibility. From age 65 it offers the ability to make regular payments AND withdrawals without penalties. In contrast, most savings and term deposits don’t offer the same flexibility.
“You can continue to access your money or leave it in your KiwiSaver account post-65. But either way, in this low interest environment you may get a better return.”
If you’re still working after 65, you can still make contributions too, as well as have access to those funds. And, although employers aren’t obligated to contribute after 65, some will.
“KiwiSaver offers the opportunity to keep building up reserves and assets for when you do retire, or to use as an income stream - like an annuity over 65 – but in a higher yielding fund,” Melissa says.