KiwiSaver: What to do with your savings after 65

There is no rush to make a decision - you can leave your KiwiSaver account open and continue to contribute. Photo / Getty Images

You can make a partial or full withdrawal but you cannot open a new account after closing the original one.

I have two jobs - one permanent and one casual.

Both companies are contributing to my KiwiSaver.

I'll be 65 next year on May 15 and eligible to withdraw my savings.

Now my permanent and casual jobs will stop contributing when I turn 65 - can I withdraw my contributions?

I've been in KiwiSaver since inception in 2007.

If I happen to land another casual job that contributes towards KiwiSaver would I be able to start all over and still get the government contribution each year?

Being early on board with KiwiSaver means you will have got the best out of the member tax credit, which was originally a $1043 dollop of cash every year from the Government before being pruned back to $521 after July 2011.

But what happens after you're eligible to dip into your KiwiSaver account?

I asked Sean Donovan, KiwiSaver associate at Milford Asset Management, for his thoughts on your question.

"You can withdraw your KiwiSaver funds provided you have been in KiwiSaver for a full five years and reached the superannuation age of retirement, currently 65. At this point you can make a partial or full withdrawal.

"The Government will stop contributing member tax credits to your KiwiSaver account once you have been in KiwiSaver for a full five years and reached the age of retirement.

"For example, if you join KiwiSaver at 64 you are still eligible to receive member tax credits and employer contributions until five years after the date you began your KiwiSaver account, when you will be 69. However, once this period expires you are no longer eligible for the government contributions and your employer is also not required to contribute to your KiwiSaver account - although some employers still contribute voluntarily.

"You are able to withdraw your KiwiSaver funds even if you are still working once you reach the age of eligibility.

"After you reach your age of eligibility you are unable to open a new KiwiSaver account once you have withdrawn all of your funds from your account and effectively closed it."

Based on the KiwiSaver rules Donovan has outlined, you will hit what the IRD terms your KiwiSaver "withdrawal date" when you turn 65 next year because you will have also been in KiwiSaver more than five years. At that point you can take out all or some of your savings including your contributions, your employer's contributions, the $1000 kick-start, any member tax credits paid and any investment earnings.

There is no rush to make a decision - you can leave your KiwiSaver account open, continue with contributions, maybe have an employer who is keen to contribute even though you've reached 65.

Alternatively, you could stop contributions - you'll need to fill in a non-deduction notice (KS51) to do that if you're working beyond 65 - and leave your KiwiSaver money invested.

Even after filing a non-deduction notice and stopping contributions it is possible to restart them again by filling in a KiwiSaver deduction form (KS2).

It is important to remember that once you've reached withdrawal age if you do withdraw all your savings and close your KiwiSaver account it isn't possible to open a new one further down the track.

It may also be a good time to check in with your KiwiSaver provider to see what is involved in withdrawing your money. Your provider may have an option to make regular withdrawals, but there may be a minimum withdrawal amount or some fees to pay, so question them about that. And an authorised financial adviser can talk to you about getting the best out of your retirement nest egg.

Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

To have your KiwiSaver questions answered by the Herald's panel of industry players email Helen Twose, helentwose@gmail.com.