Applying for NZ Super (and other government help)
Government help is available and there are other choices that we can make to keep our money flowing when we pull back from work. Going into retirement doesn’t mean we stop earning income. From the age of 65 most New Zealand residents receive NZ Super every fortnight. Here’s what you need to know about NZ Super.
You can apply for NZ Super three months before turning 65. You’ll have to make sure you’re using the right tax code when you apply for NZ Super, which depends on any other income you’re receiving. You can find out more on this NZ Government website.
Other government help
You may qualify for extra help from the government, depending on your individual situation. This could include help with ongoing health and medical costs (Disability Allowance) and housing costs (Accommodation Supplement).
You may also qualify for other assistance – for example, in an emergency situation, or if you need help with essential costs.
For more information, call Senior Services on 0800 552 002, contact your local Senior Services centre (usually located within Work and Income), or visit seniors.msd.govt.nz.
Withdrawing from KiwiSaver
After you reach 65, you become eligible to withdraw your KiwiSaver.
That includes your contributions, your employer’s contributions, the government's contributions, plus investment returns – without paying more taxes.
How fast you open the tap is up to you: keep it off for now and leave your money invested in KiwiSaver, open it slightly to drip-feed some income, or open it right up to spend or invest the entire amount in a different way.
There’s no rush – you can leave your money where it is while you work through all the issues and decide. If you want to make regular withdrawals, there may be a minimum amount required or some fees.
How do you access your KiwiSaver? Contact your KiwiSaver provider directly to find out what’s involved and to make arrangements.
Managing your retirement money
Many new retirees literally have a ‘wealth’ of options as they gain access to the funds they have built up over a lifetime. There are many choices to make on how to manage it.
The stakes are high, since no one draws down their money more than once, or gets any practice runs before cracking open a nest egg. No pressure, but it will be hard to recover our funds or build them up again if anything goes wrong.
The other important thing to know is that people don’t typically spend consistently throughout retirement. There are usually higher expenses early on (as we tick off the bucket list). Spending generally then falls during the middle stage before picking up later in life due to health costs.
So studying our options, planning and getting quality advice become more important than ever.
How to estimate your retirement income
Sorted’s retirement calculator can help give an idea of how long your money can last through the years. By setting your age to just before 65 and then inputting a certain amount of retirement savings, it shows how much steady income might be expected from a balanced fund.
This rough estimate is based on using up all your funds during your lifetime. You can also input different longevity numbers to get an alternate picture of how things could play out.
How much retirement money should you use at a time?
Rules of thumb for withdrawing your retirement money
The retirement planner shows just one way to draw down our savings, using a rule of thumb called the ‘life expectancy rule’. This means we’re stretching our savings for as long as we estimate we’ll live. It’s not the only one, however.
The New Zealand Society of Actuaries has offered four rules of thumb that can help us make decisions on how to draw down our funds. These are good for different situations, so they can give us a broad steer. Here are the four: