There is good news for those over the age of 65. From 1 July this year, being over 65 will not be a barrier to joining KiwiSaver, and anybody who has previously closed their KiwiSaver account will be able to join again. It makes a lot of sense to make this change, as more people are looking upon KiwiSaver as a long-term retirement solution, and it would be unfair to exclude anyone based on age.
KiwiSaver can be used as a diversified portfolio of funds for medium and long-term use. Given that the average life expectancy is rapidly approaching 90, people should plan on living for around 25 years after they become eligible for NZ Superannuation. Investment funds are spent gradually over retirement, and most funds will be spent between 5 and 25 years after retirement. That’s a long investment time frame.
For those with smaller portfolios, KiwiSaver is a cost effective option for managing long term money. It offers diversification between fixed interest, property and shares along with low fees. Over the long term, investment returns should be significantly greater than interest rates on term deposits. Occasional lump sum and regular withdrawals can be made if you are over 65.
KiwiSaver funds can be held as ‘just in case funds’, that is for large, unexpected expenses over the long term. For those with no health insurance this might include unexpected health costs, such as private surgery. A KiwiSaver portfolio can also be used as a way of investing funds that could ultimately be a bequest for children or grandchildren.
If you are intending to retain your KiwiSaver funds over the long term, it pays to get advice on which investment option is appropriate for you. Being over 65 doesn’t mean your money needs to be invested conservatively.