TOOLS, RESOURCES, GUIDES

Money in Retirement Guide

Accumulation to decumulation

Making the transition from earned income to investment income

Get clear, actionable guidance here for the next chapter in your life. Access information, resources, and tools to navigate your retirement journey, step-by-step.

Helpful reads for your retirement planning

About

What is your top financial priority right now

Navigating your finances in retirement can feel like a big step, but it’s also the doorway to a new and exciting chapter of life. Whether you’re diligently planning your approach to retirement or are already embracing it, we’re here to help you build financial confidence and security for the years ahead. This Hub is designed specifically for Kiwis like you, offering straightforward guidance and practical tools to empower your financial decisions. Let’s make your retirement everything you’ve worked for.

Purpose of The Retirement Hub: Your Financial Toolkit for a Secure Future

The primary goal of The Retirement Hub is to be your trusted companion for all things related to your finances in retirement here in New Zealand. We aim to demystify the complexities and provide you with:

Clear, NZ-Specific Information: Understand how NZ Superannuation, KiwiSaver, and other local financial landscapes work for you in retirement.
Actionable Strategies: Discover effective approaches for maximising your retirement income, making your savings last (decumulation), and managing your investments wisely.
Practical Tools & Calculators: Access resources to help you budget, estimate your income needs, and plan your KiwiSaver withdrawals.
Support for Key Decisions: Gain insights into addressing potential financial shortfalls and planning for significant expenses.

Essentially, this Hub is your central point for the knowledge and resources you need to manage your money effectively, so you can focus on enjoying a fulfilling and financially secure retirement.

Retirement Income Sources

Investing strategies in retirement

Making my savings last through retirement

Planning for potential financial shortfalls

Downloadable Guides

Tools & Calculators

Resources

IRD Website

For Tax Information, PIE, NZ superannuation

Sorted Website

NZ Site with some useful information and financial tools for retirement in Aotearoa.

Work and Income

For NZ Super information and entitlement and financial assistance

Retirement Commission

For research and NZ-specific retirement insights.

Eldernet

Broard information hub for older people and their support networks

Get the latest Future Focus Report

Like to stay informed about personal finance and retirement planning? Our Future Focus report is for you. - Click on image to download

The long view...

Q1 2025

A mixed bag for investors.

KiwiSaver After 65

Don't be in a hurry to cash out your KiwiSaver.

One Year vs. 30 years

Your time horizon is what matters.

Get the latest Future Focus Report

Like to stay informed about personal finance and retirement planning? Our Future Focus report is for you. - Click on image to download

Kiwisaver Faqs

Have a question or two?

HOW DO I DETERMINE MY RISK PROFILE?

WHAT ARE THE KIWISAVER CONTRIBUTION RATES?

WHEN CAN I WITHDRAW MY KIWISAVER?

HOW DOES KIWISAVER WORK FOR SELF-EMPLOYED?

WHEN SHOULD I PLAN FOR RETIREMENT?

Your investment risk profile is made up of three key components:

1. Risk Capacity – This is a measure of how much risk you can take on without potential losses causing irreparable harm to meeting your investment goals.

2. Risk Tolerance. (i.e., willingness to take risk) represents the maximum amount of uncertainty you, as an investor, are willing to accept when making an investment decision.

3. Risk Need. This is an assessment of the amount of risk your portfolio needs to take on in order to achieve your investment goal.

Our KiwiSaver Risk Profiling tool can be used as a guide for your risk tolerance and capacity and will provide an assessment as to which type of fund will be suitable for you. Click here to access the calculator

Employees

Employees can choose to contribute 3%, 4%, 6%, 8% or 10% of your gross (before tax) wage or salary to your KiwiSaver account. This is deducted from your salary or wages before you receive it. Your employer is also required to contribute at least 3% of your salary or wage.

Self-Employed

Unless you are on PAYE, there are no specified contribution rates – you can contribute as much as you want when you want. The key is to ensure that you are taking advantage of the full government subsidy by adding at least $1,042 to your KiwiSaver each year.

There are four withdrawal provisions in KiwiSaver as follows:

1. At age 65 your funds become available to withdraw.

2. As a first-home buyer. If you have been in KiwiSaver for at least 3 years, you are able to withdraw funds to help you in purchasing your first home. You must leave at least $1,000 in your account plus any funds received from an Australian qualifying superannuation scheme.

3. If you die before reaching 65, your KiwiSaver balance becomes part of your estate and can be withdrawn by your executors.

4. In cases of significant financial hardship. This would be assessed on a case by case basis.

5. If you move permanently overseas. You can withdraw all of the funds except any government contributions which must be returned.

There are no specific provisions in KiwiSaver for self-employed people who operate outside the PAYE system. However, you are still eligible to join KiwiSaver and you are entitled to the government subsidy which equates to $0.50 for every dollar you save in KiwiSaver. The maximum government contribution each year is $521 whichs means you have to contribute at least $1,042 each year to maximum the benefit.

Planning for retirement is something effectively starts as soon as you start work – by joining KiwiSaver.

However, it’s not until you reach your 40s (or 15 to 20 years out from retirement) that you need to start thinking more seriously about retirement planning;although still some way off, putting a plan in place at this stage gives you time to address potential gaps in your retirement needs.

Check out our lifestage guides for more information about retirement planning at every stage of life.

HOW DO I DETERMINE MY RISK PROFILE?

Your investment risk profile is made up of three key components:

1. Risk Capacity – This is a measure of how much risk you can take on without potential losses causing irreparable harm to meeting your investment goals.

2. Risk Tolerance. (i.e., willingness to take risk) represents the maximum amount of uncertainty you, as an investor, are willing to accept when making an investment decision.

3. Risk Need. This is an assessment of the amount of risk your portfolio needs to take on in order to achieve your investment goal.

WHAT ARE THE KIWISAVER CONTRIBUTION RATES?

Employees

Self-Employed

WHEN CAN I WITHDRAW MY KIWISAVER?

There are four withdrawal provisions in KiwiSaver as follows:

1. At age 65 your funds become available to withdraw.

3. If you die before reaching 65, your KiwiSaver balance becomes part of your estate and can be withdrawn by your executors.

4. In cases of significant financial hardship. This would be assessed on a case by case basis.

5. If you move permanently overseas. You can withdraw all of the funds except any government contributions which must be returned.

HOW DOES KIWISAVER WORK FOR SELF-EMPLOYED?

WHEN SHOULD I PLAN FOR RETIREMENT?

Planning for retirement is something effectively starts as soon as you start work – by joining KiwiSaver.

Check out our lifestage guides for more information about retirement planning at every stage of life.

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Have a structured plan

Without a work income, outside of any National Superannuation entitlement, you rely on your retirement savings and investments to generate and provide a steady income. So, you need a well-designed plan to weather short-term market fluctuations while ensuring the preservation and growth of their investments over the long term (to outpace inflation).

Plus, having a structured plan can help you stay on track with your goals and objectives. You need to consistently review where you’re at and how your investments are performing, to ensure you don’t fall behind.

Consider a mixed investment horizon

Many people view retirement as the destination, but it’s actually a journey in itself, and potentially a long one at that. With the average retiree spending 20-25 years in retirement, you need a nuanced approach when it comes to managing volatility over time.

There are different strategies to do that, one of which is the ‘bucket’ (or cascading) approach. Here’s how it works:

Divide your retirement funds into multiple imaginary ‘buckets’, based on their investment horizon – short term, medium term and long term.
Invest each bucket according to its own timeline – for example, the money you need within the next three years could be held in cash or term deposits, while the funds you plan to use in the following three or four years might be invested in low-risk or balanced funds. Anything beyond the seven-year timeframe could be invested in growth funds.
Reassess and adjust at least once a year, gradually de-risking portions of your portfolio as you move through retirement.

Essentially, the ‘bucket approach’ allows you to have three (or more) investment horizons ticking along at the same time. It can be the nuanced strategy you need to make your money go the distance.

Other risks….

Market risk isn’t the only risk you need to be aware of when it comes to managing your retirement finances. Click the links to learn more about some of the other risks you should be aware of: inflation, longevity, diversification and sequencing risks.

Have a structured plan

When investment markets are turbulent, a structured plan is your lifeboat. Firstly, if you’re looking at winding down your career, you need to determine if and when you can retire and ensure that you can afford a comfortable retirement lifestyle. Secondly, as you approach retirement, it’s important to keep in mind that your investments typically have less time to recover from market downturns.

Volatile market conditions can put a dent in your retirement savings, potentially reducing the funds you’ll have available. But that doesn’t mean you have to run for cover. In fact, with high inflation, you need a nuanced strategy that accounts for both short and long-term financial needs. In other words…

Consider a mixed investment horizon

If you reduce your investment risk too early, you may miss out on investment growth opportunities – and inflation might erode the value of your investment faster. If you don’t reduce your risk, though, market volatility may expose your investments to significant short-term losses just as you’re about to retire (sequencing risk).

So, striking the right balance between risk and growth potential is critical. And one way to do that is through a ‘bucket’ (or cascading) approach.

In short, you can split your retirement funds into three or more imaginary ‘buckets’ – short term, medium term and long term. Then, you’ll invest each bucket according to its own investment horizon.

For example, the money you need within the first three years might be held in cash or term deposits. The funds that you plan to use in the following three or four years could go into a low-risk or balanced fund. Lastly, anything beyond the seven-year timeframe you might put in a growth fund. This strategy allows you to manage and take advantage of market volatility, with three (or more) investment strategies ticking along at the same time.

Take stock of your retirement income sources

In the lead-up to retirement, you need a clear overview of where your future income will come from.

The more income sources you have, the more flexibility you can enjoy. For example, if you own your home, you may have the option to downsize it and use the equity released to complement your income. You may also consider other income sources such as rental income from an investment property or semi-retirement whereby you scale back your working week. Alternatively, you may have a business that can support your income needs even after you retire.

Diversification of income sources in retirement can be a good strategy to help you manage market volatility in your investments.

Be proactive, not reactive

The market is constantly changing, and volatility is just part of the investment landscape. But don't let it catch you off guard. Instead of reacting impulsively to market fluctuations, take a proactive approach to investing.

One way to be proactive is to choose an investment strategy that fits your risk tolerance. This means avoiding impulsive decisions and instead selecting an approach that aligns with your long-term goals.

With over 10 years left until retirement, your portfolio can probably still handle short-term volatility. So unless your personal tolerance of risk has reduced, it’s likely to still be a good idea to choose higher-risk investment options for (potentially) higher returns.

And of course, diversification is also a key component of a proactive approach. Now is a good time to think about all the tools and strategies you have available, and plug any gaps you identify.

At this stage of life, it’s also appropriate to get more serious about your retirement planning. Make sure you get your thinking and ideas about the future on paper and document a strategy to help you achieve those ideas and goals. This will provide a reference point from which to make proactive decisions about your investments, regardless of what the market is doing at any point in time.

Diversify your retirement income sources

What income sources will you have in retirement? Diversifying your future retirement income source is another way to manage volatility and achieve peace of mind. Potential income-generation tools include (but are not limited to):

KiwiSaver
A paid-off house
Property investments
Shares and mutual funds
Building/buying a business
Bonds.

It’s important to note that different assets come with different risks and benefits. Take a closer look at what you have in place, and consider your big financial picture. Can you afford to expand your strategy and incorporate other income sources? Which tools can help you spread out the risk and make the most of volatility?

Don’t crystallise reduction in investment value

Many people think that a market downturn equates to a loss of money. In fact, the actual loss only occurs when you sell or switch your investments during the downturn.

During the Covid-induced downturn of March 2020, many people tried to ‘protect’ their funds against volatility by moving them to lower-risk options. However, this led them to sell their investments when the market was low and miss out on the recovery. Little did they know that the market would bounce back only a few weeks later.

This highlights the value of avoiding impulsive decisions and sticking to your investment plan. Essentially, if your risk profile and circumstances remain unchanged, you can ignore short-term market fluctuations and focus on the long-haul journey.

Think about increasing your contributions

If the market is going through a rough patch, and depending on your personal situation and objectives, you could actually benefit from it by increasing your contributions. It’s a bit like getting a discount on your favourite item at the supermarket, except in this case, you get to buy more shares or units at the lower price and be in the front seat when the market bounces back.

Of course, the past never predicts the future, but the lessons in history show that markets recovered from periods of turmoil. And if retirement is still over 10 years away, the value of your investments has plenty of time to go up and recover.

Growing

Be proactive, not reactive

There will always be ups and downs in the market: volatility is a natural feature of investing. But rather than reacting to it, it’s important to be proactive. This involves selecting an investment strategy based on your risk tolerance, rather than making impulsive decisions.

The longer your investment timeframe, generally the more short-term volatility your investments can probably handle, as they have more time to recover. Additionally, diversifying your investment portfolio is another proactive approach. You could start by building a foundation with a KiwiSaver plan, and gradually expand your portfolio over time.

Start diversifying your retirement income sources

When it comes to managing volatility, it’s also appropriate to consider diversifying your future retirement income. There are different income-generation tools available, each carrying its own risks and benefits. These include (but are not limited to):

KiwiSaver
A paid-off house
Building or acquiring a business
Property investments
Shares and mutual funds
Bonds.

At this stage of life, you might start exploring some of these avenues if your financial situation permits. Many people start building their financial life with KiwiSaver, then add their first home to the mix. In time, this can pave the way to an investment property, and maybe a wider property portfolio.

Alternatively, if you own your own business (or plan to in the future), this could provide the framework for retirement income or a nest egg.

Don’t crystallise reduction in investment value.

A market downturn doesn’t mean you’ve lost money. In fact, you haven’t lost any money until you sell your investments or switch them when the market is low.

This is what happened during the Covid-related downturn of March 2020, when many people switched their KiwiSaver funds to lower-risk options in an attempt to protect their money from anticipated volatility. However, all they did was sell when the market was low, and subsequently miss out on the recovery only a few weeks later. This highlights the importance of staying the course, by investing according to your risk profile. In a nutshell, if your risk profile and your circumstances haven’t changed, you can probably ignore short-term market movements and focus on the long term.

De-risk only if you’re buying your first home

When managing volatility, a lot depends on your investment goal and time horizon. If retirement is your primary focus, you may want to invest with growth in mind to maximize your returns over the long term.

But if your goal is to buy your first home soon, you may need to de-risk your home deposit investments and focus on more stable options, to ensure your savings are secure until you have the keys to your new home. Once that's done, you can refocus your strategy on the long term.

Use dollar-cost averaging

Timing the market is nearly impossible, and making one-off lump sum investments can be risky. That’s where dollar-cost averaging comes in. By making regular contributions, you can take the guesswork out of buying a fluctuating asset and take advantage of buying at a lower cost when the market is low.

If you're employed and contributing to KiwiSaver, you're already using this strategy. Every month, both you and your employer make contributions to your account.

But dollar-cost averaging isn't just limited to KiwiSaver. You can also apply this strategy by regularly investing a set amount in other managed funds. This allows you to steadily build your portfolio over time and potentially benefit from market fluctuations.

Be proactive, not reactive

Markets will always go up and down – it’s their nature. But rather than responding to volatility, which can lead to ill-timed decisions, the key thing is to be proactive about it. This means choosing an investment strategy based on your risk profile.

Generally speaking, the longer your investment horizon, the more risk (short-term volatility) your investments can withstand because they have time to bounce back. We’ll return to this in a moment.
Another way to be proactive is to hold a diversified investment portfolio. But you don’t have to do it all in one go: for the time being, you can start building the foundation with a KiwiSaver plan. This brings us to the next point…

Use dollar-cost averaging

Instead of trying to time the market and making one-off lump sum investments, dollar-cost averaging means making regular contributions, at regular intervals, regardless of the ups and downs in the market.

For example, you may invest $200 each month in the same managed fund, rather than trying to time the market or follow investing trends. This way, you can take the guesswork out of buying a fluctuating asset. You’ll automatically buy more units or individual assets when prices are down and less when prices are up.

If you’re employed and invest in KiwiSaver, you already use this strategy. Every month your contributions and your employer contributions are added to your KiwiSaver account, and unless your contribution rate or income changes, the amount you invest is always the same.

Invest based on your risk profile

Your risk profile is made up of two components:

Tolerance - your attitude to risk and how you feel about market volatility) and
Capacity - how much short-term volatility your investments can withstand, typically based on your investment horizon and financial situation.

For example, if you have 30-40 years until retirement, it’s very important to invest with growth in mind, rather than focusing on protecting your money. Simply put, even if you are uncomfortable with market volatility, you may want to choose a higher-risk portfolio (e.g., growth or aggressive), to take advantage of higher potential long-term returns.

On the other hand, if you’re planning to use your savings (like your KiwiSaver funds) to buy your first home within the next two or three years, then ‘two or three years’ becomes your investment horizon. You will probably need to consider de-risking your home deposit investments until the keys to your first home are safely in your hands. After that, you can refocus your strategy on the long term.

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TOOLS, RESOURCES, GUIDES

Money in Retirement Guide

Accumulation to decumulation

Making the transition from earned income to investment income

Get clear, actionable guidance here for the next chapter in your life. Access information, resources, and tools to navigate your retirement journey, step-by-step.

About

What is your top financial priority right now

Purpose of The Retirement Hub: Your Financial Toolkit for a Secure Future

Retirement Income Sources

Investing strategies in retirement

Making my savings last through retirement

Planning for potential financial shortfalls

Downloadable Guides

Tools & Calculators

Resources

IRD Website

Sorted Website

Work and Income

Retirement Commission

Eldernet

Get the latest Future Focus Report

Like to stay informed about personal finance and retirement planning? Our Future Focus report is for you. - Click on image to download

Q1 2025

KiwiSaver After 65

One Year vs. 30 years

Get the latest Future Focus Report

Like to stay informed about personal finance and retirement planning? Our Future Focus report is for you. - Click on image to download

Kiwisaver Faqs

Have a question or two?

HOW DO I DETERMINE MY RISK PROFILE?

WHAT ARE THE KIWISAVER CONTRIBUTION RATES?

WHEN CAN I WITHDRAW MY KIWISAVER?

HOW DOES KIWISAVER WORK FOR SELF-EMPLOYED?

WHEN SHOULD I PLAN FOR RETIREMENT?

MONEY MATTERS ON YOUR MIND?

QUICK QUESTION ON YOUR MIND?

LIKE TO BOOK A MEETING?

Contact Us

Contact Us

SUBSCRIBE FOR QUARTERLY INSIGHTS

If you would like to stay informed about macro and micro issues that affect your retirement investments, sign up to Future Focus. Use this form to get notified of new editions each quarter.

Have a structured plan

Consider a mixed investment horizon

Other risks….

Have a structured plan

Consider a mixed investment horizon

Take stock of your retirement income sources

Be proactive, not reactive

Diversify your retirement income sources

Don’t crystallise reduction in investment value

Think about increasing your contributions

Growing

Be proactive, not reactive

Start diversifying your retirement income sources

Don’t crystallise reduction in investment value.

De-risk only if you’re buying your first home

Use dollar-cost averaging

Be proactive, not reactive

Use dollar-cost averaging

Invest based on your risk profile

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Login to access this feature.

Contact Us

Register Here