KiwiSaver doesn't end at 65

I have been a member of KiwiSaver for the past seven years. I contribute 4 per cent of my salary and I am fortunate that my employer matches my contributions. I will turn 65 in May next year. What happens to my KiwiSaver then? If I keep it going, can I transfer it to my family trust?

Some people still believe that KiwiSaver finishes when they are 65. This is not the case.

Once you become eligible for NZ Super (and have been a member for at least five years), your KiwiSaver becomes an ordinary unlocked savings plan without top-ups from the Government.

Your employer is no longer obliged to contribute to your KiwiSaver, although some do.

You can withdraw money from it, add lump sums to it, and even switch to another scheme altogether.

However, if you withdraw all your money your account will be closed and you will not be able to reopen it as you will be over 65.

Those members who are still working can continue contributing to KiwiSaver. And why not?

If you have managed without the money up until now, you might as well keep on saving. In fact, why not increase your contributions?

Most New Zealanders become eligible for NZ Super at age 65.

At current rates, a single person living alone receives $384 per week (after tax at M rate) - an annual income boost of around $20,000 per year.

I have met a number of people who are saving most if not all of their NZ Super while they continue to work. You can set up a direct debit into your KiwiSaver directly by contacting your provider.

Can you transfer your KiwiSaver to your family trust? The short answer is no.

A KiwiSaver account can only be owned by an individual. However, you can withdraw some or all of the money and transfer those funds to your family trust if you wish. Talk to a lawyer and/or accountant before making a decision on that.

We are living longer these days, so plan for a long retirement.

Statistics New Zealand has a useful calculator to work out your life expectancy depending on how old you are now.

A male born in 1952 can expect to live to the ripe old age of 86.

To be on the safe side, expect to be around for at least 25 years from the age of 65.

How much will you need to save to live comfortably once you do retire?

Many people look forward to giving up work, but when the day comes round they find it hard to adjust to living on a much lower income.

NZ Super covers the basics, but there's not much left over for car upgrades, home maintenance or health costs - let alone holidays.

Any extra savings will certainly help.

Someone who retires with savings of $100,000 (invested at 2 per cent net per annum) will have an extra $5122 per year over a 25 year retirement (spending both interest and capital over that time).

That will give them an extra $100 per week to live on - and a more comfortable retirement.

You can see why many people choose to keep working after 65 and plump up their nest egg.

- Shelley Hanna is an authorised financial adviser FSP12241. Her free disclosure statement is available on request by calling 06 870 3838 or go to www.peak.net.nz. The information in this article is general and is not personalised. Send your KiwiSaver questions to shelley.hanna@peak.net.nz