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KiwiSaver funds complement superannuation
Q.        What my husband and I would like to know is about KiwiSaver as you retire. My husband is 67 and has just retired from full time work. He joined KiwiSaver in April 2010 paying in the maximum and with the employer’s contributions as well his balance is now $59k. He will be able to access it in April 2015 (5 years since joining). What we want to know is how this will affect his NZ Super?

A.         I am very impressed with the balance of your husband’s KiwiSaver after just 4 years in the scheme. Congratulations to him on making the most of his last few years in the workforce. 

The official KiwiSaver website at provides the answer to your question: “NZ Super provides for a basic standard of living in retirement, but it may not be enough for the kind of retirement you want. Having a KiwiSaver account doesn't affect your eligibility for NZ Super or reduce the amount of NZ Super you would be eligible for.  KiwiSaver savings will complement NZ Super to provide you with a better standard of living for your retirement.”

If you are both eligible for NZ Super you will know that a married or de facto couple over 65 receives $564 per week (or $282 each) at M tax rate.  This is $33,199 before tax per annum, while a single person living alone gets $21,931 before tax per annum.

New Zealand is one of the few countries in the world to offer a tax-financed, non means-tested basic pension. It is more generous than the welfare benefits available to those under 65 as it is indexed to wage inflation, rather than price inflation. According to a 2013 Treasury paper entitled The Future Costs of Retirement Income Policy and Ways of Addressing Them: “This implies a value judgement that poverty prevention is more important for this age group than for others, implying in turn a judgement that older people require more support because they are reliant on payments for a relatively long period, and are less likely to be able to obtain income for themselves, than younger individuals.” 
New Zealand has one of the lowest rates of poverty among over-65s compared to other OECD members. It is also low by comparison to poverty rates across New Zealand as a whole. 

Nevertheless, many retired people still find it difficult to meet all their living costs without some other form of income either from investments, taking in a boarder, or part-time work. In the years leading up to retirement, it is a good idea to work out a budget and try to live on the level of income you expect to get in retirement (saving any difference).  I am encountering quite a number of people who would like to retire before the age of 65. This also involves careful advance planning as they are unlikely to qualify for any state benefits before that age.

When your husband reaches the age of KiwiSaver eligibility in April next year he will have several options including:  leaving the money in his KiwiSaver fund for future expenses; cashing it up for a specific purpose(s); or setting up regular withdrawals. If he sets up withdrawals of $400 per month his $59,000 could last for 15 years at an average return of just 3% per annum, or 20 years at 5% per annum.

The Government’s KiwiSaver website offers sage advice to people in your situation: “To find out how much you're likely to need in retirement, visit the Sorted website or seek advice from a financial adviser.”
Hawkes Bay Today 17 June 2014

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 870 3838. The information contained in this article is of a general nature and is not personalised. Send your KiwiSaver questions to