Three things change, one thing does not
At 65 your KiwiSaver savings become available — but you are not forced to touch them:
- You can withdraw at any time, in any amount. There is no rule requiring a lump sum and no penalty for leaving it invested.
- The government contribution stops. Once you are eligible to withdraw you are no longer eligible for the up-to-$260.72 top-up.
- Employer contributions are no longer compulsory. You can keep contributing, and some employers keep matching — check your employment agreement rather than assuming.
- What does not change: the account keeps investing, and withdrawals are tax-free because PIE tax has already been paid inside the fund.
You do not have to be retired, or stop contributing
KiwiSaver is increasingly used as an ongoing investment account after 65. If you are still working, you can keep contributing at 3.5% or more, keep the account invested in a growth or balanced fund, and withdraw only what you need. IRD's position is that employer contributions are not required once a member is eligible to withdraw — some employers continue them anyway, which is worth asking about in writing.
Your three withdrawal options
| Option | How it works | Best when |
|---|---|---|
| Lump sum | Withdraw some or all at once; the rest stays invested | Clearing a mortgage or debt, funding a one-off purchase |
| Regular income | Scheduled withdrawals, weekly to annually, from the balance | Topping up NZ Super to cover living costs |
| Stay invested | Withdraw nothing; the balance keeps compounding | NZ Super plus other income already covers essentials |
Sequencing the first five years
A workable order of operations for a couple with $400,000 at 65:
- Years 1–2: live on NZ Super ($854.08 a week net combined for a couple who both qualify) and leave KiwiSaver invested.
- Years 3–5: move about three years of planned withdrawals — say $60,000 — into a defensive fund or short-term deposits, so a sharemarket fall never forces you to sell growth assets.
- Each year: refill the defensive bucket from the growth portion if markets allowed it.
- Always keep a $20,000–$30,000 buffer for a roof, a car or a medical event.
This is not a market-timing strategy. It is about never having to crystallise a 20% loss to pay a bill.
Get your PIR right at retirement
Fund earnings are taxed at your Prescribed Investor Rate: 10.5% if taxable income is $14,000 or less, 17.5% up to $48,000, and 28% above that. Many retirees move into the 17.5% band when wages stop and never update their PIR, paying 28% on every dollar of fund earnings as a result. Update it in myIR after your income changes — the difference is about 10% of your annual investment return.
Two things that can be affected
- Residential Care Subsidy: a large KiwiSaver balance counts as an asset if you later apply for a rest-home subsidy. If that is a realistic prospect, get advice before withdrawing everything.
- NZ Super: not affected. It has no income or asset test, so withdrawing your KiwiSaver does not reduce it — although overseas pensions can.
Deep dive — 2026 update
Worked example: $250,000 at 65
Take a single person with $250,000 in KiwiSaver at 65, eligible for $555.15 a week net from NZ Super and needing about $750 a week to live on. The gap is roughly $195 a week, or $10,140 a year.
| Approach | Withdrawal rate | What happens to the balance |
|---|---|---|
| Withdraw $10,140 a year, stay invested | ~4.1% | At 4.5% net growth the balance is broadly maintained in real terms |
| Withdraw $20,000 a year | 8% | Balance falls steadily; money likely runs out in 15–18 years |
| Take the lot as a lump sum | n/a | Removes market risk and removes growth; depends entirely on where it is reinvested |
A withdrawal rate around 4% is the level most NZ retirement research treats as sustainable over a 25–30 year retirement. Above 5%, you are spending capital rather than returns, which is fine if that is the plan — but it should be a plan.
Should you de-risk your fund at 65?
Not automatically. If you are only withdrawing 4% a year, the remaining 96% still has a 20+ year horizon and can stay in a balanced or growth fund. The money you need in the next three years, however, should not be exposed to a sharemarket fall:
- Keep 3 years of withdrawals safe — a defensive fund, term deposits or a cash PIE fund.
- Leave the rest invested for growth, in your existing balanced or growth fund.
- Review annually and refill the safe bucket when markets have done well.
The $1,000 rule and other withdrawal mechanics
- No minimum balance requirement at 65 — you can withdraw down to zero. The $1,000 minimum applies to first-home and hardship withdrawals, not retirement.
- Withdrawals are not income for tax purposes — no tax return entry is needed, because PIE tax has already been paid inside the fund.
- Wait times: most providers pay out within 5–10 business days of a request; check whether they pay weekly, fortnightly or monthly.
- You can leave the account open while withdrawing, and re-contribute later if you wish — though no further government contribution is available.