More Kiwis are choosing to keep their KiwiSaver going when they reach retirement, a financial provider says.
Current KiwiSaver rules allow members to withdraw savings when they're 65. But those who choose to keep working or have other money coming in may decide not to.
The CEO of AMP Wealth Management Blair Vernon, said that although they'd reached retirement age, a growing number of customers were choosing to keep some money invested.
'We're seeing fewer KiwiSaver clients withdraw all their funds when they reach retirement...nearly 7 percent less than this time last year," Vernon said.
Although current low interest rates could be an attributing factor, KiwiSaver's flexibility meant that members could take some money out and keep earning interest on the rest.
"Another compelling feature of KiwiSaver for members aged 65+ compared to some other savings products is the ability to withdraw partial amounts from your funds whenever you like, or need, without incurring any penalty. This can be especially important for this demographic as their needs change," Vernon added.
Sorted managing editor Tom Hartmann, said that a term deposit was traditionally considered 'safer'. KiwiSaver 'defensive' (cash) funds are similar to a term deposit. In general, due to the way they're managed, KiwiSaver providers achieved better results.
"People are finding that even if they're in a 'defensive' (cash-based) KiwiSaver fund, they can actually do better in terms of interest in KiwiSaver, with the same level of risk," Hartmann explained.
Another key benefit of keeping KiwiSaver funds invested is that as many retirees were investing for later in life, they didn't need all their funds in one go.
"For example, if their time horizon is 10 plus years, they can take advantage of being invested in higher-risk funds such as shares or commercial property," Hartmann added.
Potential disadvantages of keeping funds invested include being unaware of high fees and having money invested in a fund that doesn't match individual circumstances.
"For example, if you were in a particularly expensive fund and didn't realise, [or] in a fund that didn't match your risk profile (e.g. single sector shares), this could be a drawback.
"As always, it's important that everyone makes an active choice of fund that's appropriate for their circumstances," Hartmann added.
Although Government contributions currently end at age 65, depending on their employment situation, those still working could continue to get employer contributions, allowing them to grow their savings.
"For those aged 65 plus, the fact that their KiwiSaver money is currently working harder for them compared to bank deposits for example, while also allowing greater flexibility, means it makes absolute sense for them to stay in KiwiSaver," financial adviser and commentator Michael Cave added.
People wanting to keep their funds invested after they turn 65 are advised to check with their KiwiSaver provider on how often they can withdraw savings and the process for doing so.