Cracking open the nest egg - how to spend your savings in retirement

Te Ara Ahunga Ora Retirement Commission has released a comprehensive report that considers how people draw down on the savings they have accumulated to support their retirement and has suggested a series of recommendations to better support the process.  

As part of the 2022 Review of Retirement Income Policies (RRIP) the Government has asked Te Ara Ahunga Ora to gain a better understanding of ‘decumulation’.  

Decumulation means drawing down savings and investments that have been built up over an individual’s working life to provide income in retirement.  

Insights gathered for the report reveal many people are “sleep walking” into retirement and not getting appropriate guidance for how to best manage their nest egg, if they have managed to accumulate one.  

Report author, and Policy Lead at Te Ara Ahunga Ora, Dr Michelle Reyers says there has been limited research done in Aotearoa related to how New Zealanders spend their KiwiSaver funds and post-retirement financial decision making. 

“We wanted to fill some of the knowledge gaps through our analysis. We now have access to data which gives us a better understanding of what people’s KiwiSaver balances look like and how they will track up to age 65 when they will be able to access the funds. We have also conducted qualitative and quantitative research with older New Zealanders on their retirement experiences today.” 

International best practice approaches to spending in retirement focus on balancing “longevity risk”, the risk of running out of money, with giving people choice and flexibility to use their retirement savings as they see fit.  

In New Zealand longevity risk protection is provided by New Zealand Super, as it provides a guaranteed income for life. The safety net of New Zealand Super means that people can have choice and flexibility when it comes to accessing their KiwiSaver funds in retirement.  

In light of this flexibility and choice, a strong theme that has emerged from the research is the need for guidance on how to best spend savings in retirement, and the using approaches such as “rules of thumb” to help people draw down funds.  

According to Dr Reyers, “guidance and advice delivered in a consistent manner in a simple system creates an environment that supports individual decision making. It is really important that the financial services sector work together to use consistent terminology and supply consistent information and guidance for the drawdown phase of retirement.” 

The need for guidance to manage the drawdown phase increases as KiwiSaver balances grow. Research commissioned by Te Ara Ahunga Ora in 2022, showed 56 – 60-year-olds had an average of $49,206 and 61 – 65-year-olds an average balance of $53,579.  As more New Zealanders approach retirement having spent longer in KiwiSaver, average balances will increase. These increasing balances highlight the importance for all KiwiSaver providers to reach out to pre-retirees at key milestones, such as 55 and 60 years old in the approach to retirement to provide information and guidance regarding their options.  

The research also found that an increasing number of Kiwis are choosing to keep their KiwiSaver accounts open after the age of 65. This presents an opportunity for KiwiSaver providers to consider how to make their products more user-friendly and accessible for those who want to use their KiwiSaver account as a managed drawdown account in retirement.   

Dr Reyers has made the following recommendations: 

  • KiwiSaver providers should use consistent terminology, and supply consistent information and guidance, to KiwiSaver members regarding drawdown.   
  • KiwiSaver providers should contact members at milestones approaching retirement to provide information and guidance on options. Calculators and tools need to be developed so that people can understand their choices about withdrawing savings and compare options.  
  • KiwiSaver products should be user friendly for those who are using them as a managed drawdown account after age 65 
  • New Zealand Super must continue to be a key pillar of the New Zealand retirement income landscape as it provides protection against longevity risk (running out of money), and provides more equitable retirement outcomes, as it is universal and gender neutral  




Notes to editors: 

About the RRIP   

Under the New Zealand Superannuation and Retirement Income Act 2001, the Retirement Commissioner is required to carry out a Review of Retirement Income Policies (RRIP) every three years and report to Government.  Key topics to be focused on for the 2022 review relate to three broad areas comprising New Zealand Superannuation, housing, and private savings including KiwiSaver.     

More information, including the terms of reference, is available here.    

About NZ Super 

New Zealand Superannuation (NZ Super) is the government pension paid to Kiwis aged 65 and older.  

Any eligible New Zealander receives NZ Super, regardless of:  

  • How much they earn through paid work 
  • Their savings and investments 
  • Any other assets they own 
  • What taxes they have paid. 
  • 40% of all over 65s have less than $100 pw from other sources (40% of singles have no other income). 
  • the next 20% have on average around 70% of their income from NZS and other government transfers 


Media contacts:  

For more information, or to arrange any interviews contact: 

Elizabeth O’Halloran | Communications Specialist 

Mob: +64 21 749 467