Should You Move Your KiwiSaver Fund to Cash at Retirement? (NZ, 2026)

Going all-cash the day you turn 65 is rarely the right move. With a 20-year retirement ahead, here is how to choose a KiwiSaver fund and compare it across NZ providers.

TL;DR: Going fully into cash at 65 is rarely the best move. Nothing forces you to switch, and your money likely needs to last about 20 more years. Most retirees do better holding a mix: a cash "spending bucket" for the next year or two, with growth assets for the rest.

KiwiSaver is often framed as a one-way trip: contribute, grow, and at 65 you "cash out". A common question before turning 65 is whether to move the whole balance to cash to be safe.

It is an understandable instinct, but for most people it is a costly mistake. Here is why - with NZ numbers, named funds, and a framework you can use.

Why do people assume they should de-risk at retirement?

Three ideas drive the "move it to cash" reflex, and all three are half-truths.

"Markets fall, and I will not have time to recover." True that a market fall hurts more once you stop contributing. But it does not follow that you have no time to recover - retirement is long (more on that below).

"I have finished saving, so the job is done." The accumulation phase is over, but a new phase - decumulation, or spending the money down - has just begun, and it can run for two decades.

"Cash cannot lose money." Cash will not fall in nominal terms, but it quietly loses to inflation and badly lags growth assets over time. Over the year to 30 April 2026, AMP's KiwiSaver Cash Fund returned 2.46% while its Growth Fund returned 19.51%; even over five years the Cash Fund averaged 3.06% p.a. against the Growth Fund's 7.16% p.a.

The discomfort is real. The conclusion - all cash, all at once - usually is not.

What actually changes about KiwiSaver at 65?

The honest answer: nothing forces a switch

This is the part most people are never told. At age 65 there is no significant functional difference between a KiwiSaver fund and an ordinary managed investment fund, so there is no automatic need to switch to cash, or to switch anything at all.¹ Your fund keeps running exactly as it did the day before your birthday.

What does change at 65 is access and eligibility:

• You can now withdraw from KiwiSaver (a lump sum, regular payments, or nothing at all - your choice).
• You stop qualifying for the government contribution, which is paid only from age 16 to 64 (since 1 July 2025 it also covers 16- and 17-year-olds, and the maximum was halved to $260.72 a year).⁶⁷
• Employer contributions become optional once you can withdraw, and ESCT no longer applies in the usual way if you stop contributing through payroll.¹⁰

Notably, over-65s are not stampeding for the exit. In the year to March 2025, members aged 65 and over withdrew $3 billion from KiwiSaver - and the FMA's read is that they "appear to be managing their nest egg carefully rather than withdrawing it all at once."⁵ That measured approach is exactly the right starting point.

How long does your KiwiSaver actually need to last?

This is the number that should anchor every decision. A New Zealander reaching 65 can expect roughly two more decades: Stats NZ cohort tables show those reaching 65 in 2016 had a life expectancy of 86.2 years for men and 88.9 years for women - about 21 and 24 further years.²

Twenty-plus years is a long investment horizon - longer than many people had when they started their KiwiSaver. Locking the whole balance into cash for a 20-year journey is like selling the car the moment you reach the motorway. The recent contribution changes only reinforce holding some growth: the default rate rises from 3% to 3.5% on 1 April 2026 and to 4% on 1 April 2028,⁸ and Budget 2025 modelling found these settings could make balances last around 30% longer than before - though that figure applies specifically to median salary and wage earners who contribute without interruption over a 40-year working life, and roughly 20% of members (such as the self-employed and low earners) would not benefit.¹³

Growth vs balanced vs conservative for a 20-year retirement

The long-run cost of de-risking too hard shows up clearly in the data. Over the 10 years to March 2024, the median KiwiSaver return (after fund charges, before tax) was 8.3% p.a. for growth funds, 6.9% p.a. for balanced funds and 4.1% p.a. for conservative funds.³

That ~4% annual gap between growth and conservative compounds brutally over a 20-year retirement. Provider-level data tells the same story - here are Milford's 5-year average returns (after fees, before tax, to 31 March 2025):

The point is not "everyone should be in growth at 65". Growth funds swing harder, and if you are drawing income from a fund that has just dropped 20%, you crystallise those losses - the well-known "sequence of returns" risk. The point is that going all the way to cash throws away two decades of compounding to solve a problem that only really affects the next year or two of spending. That is what the bucket approach is built to fix.

How does a bucket approach balance safety and growth?

Rather than one all-or-nothing decision, NZ decumulation analysis recommends keeping growth and liquidity buckets rather than going fully conservative, precisely because retirement now spans close to two decades.¹¹ One common approach uses three buckets:

The three-bucket framework

The logic is simple: you keep short-term liquidity for roughly the next couple of years of spending while keeping longer-term assets invested for growth.¹² When markets are up, you top up bucket 1 from bucket 3. When markets fall, you spend from bucket 1 and leave the growth bucket alone to recover - no forced selling at the bottom.

You do not need three separate KiwiSaver accounts to do this. Many people run bucket 1 in a cash or conservative KiwiSaver fund (or an everyday savings account) and keep buckets 2 and 3 in a balanced or growth fund. The free KiwiSaver Health Check is a quick way to pressure-test your current fund, and an adviser can map your specific withdrawal needs to the right split - that is what our KiwiSaver review covers.

Moving 100% to cash is safe from a market drop, but not from inflation, and not from outliving the money. Safety in retirement is about matching your money to when you will spend it, not eliminating every market wobble.

What should you compare across KiwiSaver providers?

If you are reviewing your retirement fund, three things matter far more than last year's headline return.

1. Fees. Industry-wide, KiwiSaver fees averaged 0.7% of funds under management in 2025, with total fees deducted of $868.5 million across all schemes.⁴ Total KiwiSaver FUM grew 10% to $123 billion in the year to March 2025 while fees held at 0.7%.⁴ But individual funds vary widely. Compare Fisher Funds' total annual fund charges below - the gap between conservative and growth is real, and over 20 years a 0.2% difference is thousands of dollars.

2. Fund profile and long-run return. Make sure the fund's risk profile matches your bucket plan, not your nerves. Category 10-year average annual returns (mid-2025) were Aggressive 8.6%, Growth 7.8%, Balanced 6.4%, Moderate 4.6% and Conservative 4.1% - and Canstar's top-10 funds for the 12 months to March 2026 averaged 7.7% net of charges and tax, with the seven growth funds in that top 10 averaging 8.3%. (These growth figures differ slightly from the 8.3% growth-fund number above because they cover different periods and providers - the Retirement Commission's 8.3% is the 10 years to March 2024, while the 7.8% is a mid-2025 category measure; both are accurate for their own dataset.)

3. Drawdown facility. This is the one most people forget. Once you are 65, can the provider pay you a regular automatic withdrawal, and how often? Fisher Funds and several providers offer a regular retirement drawdown facility for over-65s - but minimum amounts and frequencies differ, so confirm them before you commit. A great fund with a clunky payment process makes living off it harder than it needs to be.

For an apples-to-apples view, Sorted's Smart Investor lets you open up and compare any KiwiSaver or managed fund on fees, profile and returns - it is the impartial tool we point clients to. To go deeper, our KiwiSaver fund comparison lines up every major provider against your plan.

Common mistakes retirees make with their KiwiSaver fund

• Going 100% cash on day one. The headline mistake. It solves a 2-year problem with a 20-year solution.¹¹
• Withdrawing the lot at 65 to "be done with it". Most over-65s sensibly do not - they drew $3 billion in total in the year to March 2025, managing it carefully rather than emptying accounts.⁵
• Never checking the PIR. Being on the wrong Prescribed Investor Rate (10.5% / 17.5% / 28%) quietly over- or under-taxes returns. Thresholds: 10.5% if taxable income is $15,600 or less and combined income $53,500 or less; 17.5% up to $53,500 and combined $78,100; 28% above that.⁹
• Chasing last year's top performer. A single strong year tells you little; the switch costs nothing in fees but a panicked one can lock in losses.
• Ignoring fees because the balance is "big enough". On a $300,000 balance, the difference between 0.93% and 1.13% is $600 a year - every year for 20 years.

How Smiths reviews your fund and provider impartially

Smiths does not run its own KiwiSaver scheme, so there is no in-house fund to sell. In a review we map your expected spending year by year, set your bucket split, check your PIR and provider drawdown options, and compare your current fund against every major NZ provider - Milford, Fisher Funds, Booster, Simplicity, Generate, Kernel, ANZ and the rest - using the same Smart Investor data you can see yourself. You leave with a written recommendation and a plan you understand.

Frequently asked questions

Do I have to move my KiwiSaver to cash when I turn 65? No. There is no rule forcing any switch at 65 - a KiwiSaver fund works much like an ordinary managed fund, so you can leave it invested exactly as it is.¹ Most retirees keep a mix of cash and growth rather than going all-cash.

How long does my KiwiSaver need to last in retirement? Plan for roughly 20 years or more. New Zealanders reaching 65 have a life expectancy of about 86 (men) to 89 (women) - around 21 to 24 further years - so your money has a long way to run.²

Is a cash fund safe for my whole KiwiSaver? Cash is safe from market falls but not from inflation, and it badly lags growth over time - AMP's Cash Fund returned 3.06% p.a. over five years versus 7.16% p.a. for its Growth Fund. Most plans keep cash only for the next year or two of spending.

What is a bucket strategy for KiwiSaver in retirement? You split your balance into a short-term spending bucket (about two years, in cash), a medium-term bucket (conservative/balanced) and a long-term growth bucket. You spend from cash and let growth recover after falls, so you are not forced to sell at the bottom.¹¹¹²

Can my KiwiSaver provider pay me a regular income after 65? Many can. Fisher Funds and several other providers offer a regular drawdown facility for over-65s - but minimum amounts and payment frequencies vary, so confirm the details with your provider before relying on it.

What PIR should a retiree be on? It depends on income: 10.5% if taxable income is $15,600 or less (combined $53,500 or less); 17.5% up to $53,500 (combined $78,100); otherwise 28%.⁹ Many retirees drop a PIR band once they stop working - worth checking.

General information, not personalised financial advice. Seek advice tailored to your situation before acting. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 16 June 2026.