Choosing the right fund for your retirement timeframe

Being in the right fund is important for all KiwiSaver members – and it’s especially important when you’re close to retirement or already retired.

3 minute read

People retire at all different ages, so there’s no set rule for which fund you should be in when you turn 65. But it’s important to take some time to think about your own situation to figure out what’s best for you.

You have choices

You can begin withdrawing money from your KiwiSaver account when you reach retirement age (currently age 65), but this doesn’t mean you have to withdraw it all at once. You also have the option to leave some or all of your money in your KiwiSaver account to use later. With many New Zealanders working and living for longer, this can be a great way to continue to grow your savings. And if you decided to stay invested in KiwiSaver, it’s important to think about which fund you’re in.

Why is fund choice so important at retirement

Investing comes with degrees of risk and potential return, depending on the fund you choose. Lower risk funds (which tend to have a higher percentage of income assets) often have lower potential returns over the long term than higher risk funds (which tend to have more growth assets). But lower risk funds generally have less extreme ups and downs than higher risk funds, which means in periods of market stress, the value of investments in lower risk funds might not fall as far or as fast as higher risk funds.

It’s important to be in a fund that matches your investment timeframe because if not, you might find your balance is experiencing a ‘down’ when you need to access some of your savings, and then you might not have enough time to wait for the ‘up’ for your balance to recover. This could mean your savings run out sooner than you need them to. Remember that, generally, markets tend to drop in value faster than the time it takes for them to recover – the saying is that markets take the elevator down and the stairs back up.

When are you planning on retiring

If you’re at least a few years away from needing to access your funds for retirement, then you might consider a fund that has a higher level of risk and potential return because you should have more time to recover from any short-term setbacks or market dips.

However, if you’re close to retirement (or already retired) and looking to access your funds soon, you might want to consider a lower risk fund. This will give you a little more certainty around your savings, when you’re planning for the retirement lifestyle you want and can afford.

See below for the minimum recommended investment timeframes for the BNZ KiwiSaver Scheme funds:

High Growth Fund – 12 years minimum
Growth Fund – 10 years minimum
Balanced Fund – 7 years minimum
Default Fund – 7 years minimum
Moderate Fund – 5 years minimum
First Home Buyer Fund – 3 years minimum
Cash Fund – no minimum

For more information about each of our BNZ KiwiSaver Scheme funds see our online fund guide.

The great thing about KiwiSaver is its flexibility. From age 65 you can continue making contributions or make regular withdrawals - the choice is yours. It’s important to review your fund choice frequently to make sure it still matches your retirement situation.

Managing your money when you retire

If you’re close to retiring or have already retired, then make sure you have a plan in place to stay on top of your finances.

When it’s time to start spending your retirement savings

There are no set rules on how you use your KiwiSaver money when you retire. However, there are a few important things to consider.

Four tips for dealing with volatility in your investments

Volatility is part and parcel of investing. Rather than worry about market volatility and downturns, be prepared for them. Here are four tips to help you ride out those market fluctuations.

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This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact BNZ or your financial adviser. Neither BNZ nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any information, representation, or omission, whether negligent or otherwise, contained in this publication.

BNZ Investment Services Limited, a wholly owned subsidiary of Harbour Asset Management Limited, is the Issuer and Manager of the BNZ KiwiSaver Scheme. Download a copy of the BNZ KiwiSaver Scheme Product Disclosure Statement PDF 1.1MB, or pick up a copy from a BNZ branch.

Investments in the BNZ KiwiSaver Scheme are not bank deposits or other liabilities of Bank of New Zealand (BNZ) or any other member of the National Australia Bank Limited group. They are subject to investment risk, including possible delays in repayment. You could get back less than the total contributed. No person (including the New Zealand Government) guarantees (either fully or in part) the performance or returns of the BNZ KiwiSaver Scheme or the repayment of amounts contributed. National Australia Bank Limited, the ultimate owner of BNZ, is not a registered bank in New Zealand but a licensed bank in Australia and is not authorised to offer the products and services mentioned on this webpage to customers in New Zealand.

BNZ Investment Services Limited (BNZISL) uses the BNZ brand under licence from Bank of New Zealand, whose ultimate parent company is National Australia Bank Limited. No member of the FirstCape group (including BNZISL) is a member of the NAB group of companies (NAB Group). No member of the NAB Group (including Bank of New Zealand) guarantees, or supports, the performance of any member of FirstCape group’s obligations to any party.