Decumulation is the drawing down of savings or investments that have been accumulated over time (the decumulation in retirement of assets accumulated in pre-retirement).
As part of the 2022 Review of Retirement Income Policies Dr Michelle Reyers prepared a paper on policy insights regarding decumulation. Download the paper.
Since the inception of KiwiSaver in 2007, regulators, policy makers and providers have focused on the accumulation phase of saving in KiwiSaver. However, KiwiSaver has now been in existence for more than 14 years, and it is expected that individuals approaching retirement are now doing so with larger sums of money accumulated in KiwiSaver. Therefore, the focus is now switching to decumulation and what this means from a product and policy perspective.
One area that often receives coverage when discussing decumulation is annuities, however decumulation is broader than annuities, and there are a number of non-annuity type decumulation and drawdown products that are also available. In addition, equity release is another way to decumulate assets (in this case housing wealth).
Much of the work conducted by Te Ara Ahunga Ora Retirement Commission focuses on enabling New Zealanders to retirement comfortably once they reach 65 years of age.
A range of new research on older people has been undertaken and can be viewed here.
Additional information and resources
A paper commissioned for the 2019 RRIP provided an assessment of decumulation of retirement savings and other assets. Download the paper.
Another report from the 2019 RRIP also considered decumulation, and considered decumulation models available in a number of OECD countries. Download the report.
The 2016 RRIP looked at decumulation from a number of perspectives, including surveys, reports and interviews with the public.
Asset drawdown (decumulation) and paid work profile of Pre- and Post-Retirees
This research reveals more about the experiences of work, income, expenses, and financial advice among those close to retirement and those already retired. Of specific interest was how those aged 65 accessed and spent any savings and income (including Kiwisaver), referred to as ‘decumulation’.