Phased Retirement in NZ (2026): Part-Time Work With NZ Super & KiwiSaver

Winding down to part-time at 60+? Here's how NZ Super (not income-tested), KiwiSaver employer contributions after 65, and tax codes work when you keep earning while drawing your retirement income.

Fewer New Zealanders are stopping work in a single day. Many wind down instead: dropping to three or four days a week, taking on contract work, or shifting to something lighter for a few more years. Done well, this "phased retirement" can stretch your savings, keep you connected, and ease the change. The income side can look complicated when wages, NZ Super and a KiwiSaver drawdown all arrive at once, but the rules are reasonably straightforward once you see them laid out.

TL;DR: NZ Super is not income-tested, so you can keep working part-time at 65+ and still receive the full payment regardless of what you earn ¹. The main things to get right are your tax code (so you don't face an end-of-year bill) ⁴ and how you treat KiwiSaver once employer contributions are no longer compulsory after 65 ⁵. The 65+ labour-force participation rate has climbed to about 26% ⁸.

What is phased retirement and why are more Kiwis doing it?

Phased retirement simply means easing out of full-time work over a period of years rather than stopping all at once. In practice that might be cutting back to part-time hours with your existing employer, moving to seasonal or contract work, or starting something smaller and more flexible after a long career.

More New Zealanders are doing this. The labour-force participation rate for people aged 65 and over has risen from 5.9% in 1994 to about 26% in 2024, among the highest in the OECD ⁸. On an international comparison, New Zealand ranks 8th of 30 OECD countries for 65+ participation, well ahead of Australia in 14th ⁹. For context, the overall seasonally adjusted participation rate across all ages was 70.7% in the March 2025 quarter ¹⁰.

The reasons vary. Some keep working because they enjoy the routine and social contact. Others do it to give their savings more time to grow and fewer years to fund, since a part-time wage in your late sixties means you draw down less of your KiwiSaver. There are trade-offs too: less free time in years when your health is usually still good, and the admin of juggling several income sources. Whether it suits you depends on your work, your health and your finances.

Can you get NZ Super and still work part-time?

Yes. NZ Super is not a benefit that depends on whether you are working. To qualify you generally need to be 65 or over and meet the residence rules. Once you are receiving it, you can keep working as many or as few hours as you like and still get your payment ¹.

This is the single most useful fact for anyone planning a wind-down. You do not have to choose between a wage and your superannuation. From 65 you can draw both at the same time, which is exactly what makes a phased approach workable: part-time income on top of a guaranteed, inflation-indexed base.

There is no requirement to "retire" to claim NZ Super, and no minimum drop in hours. Some people apply for NZ Super at 65 and keep working full-time for a while; others go straight to part-time. The choice is yours.

Is NZ Super reduced if you keep earning?

No. NZ Super is not income-tested, which means your wages do not reduce or abate it ¹. Whether you earn nothing or earn a healthy part-time salary, the gross NZ Super rate is the same. This is different from most other forms of government support, which reduce as your income rises.

The current after-tax rates, effective 1 April 2025 to 31 March 2026, are:

Figure (described): a stacked bar chart titled "Phased retirement income stack" showing income composition at ages 63, 65, 68 and 70 under a part-time wind-down. At 63, the stack is mostly part-time wages with no NZ Super yet. From 65, an NZ Super band (about $27,998/year for a single person ²) is added underneath, the wage band shrinks as hours reduce, and a KiwiSaver drawdown band grows on top to fill the gap. By 70, wages are small or gone, with NZ Super plus KiwiSaver drawdown carrying most of the income. Modelled from Work and Income NZ Super rates ² and IRD KiwiSaver rules.

Two things to keep in mind. First, while wages do not reduce NZ Super, they do affect your overall tax position, because NZ Super and wages are added together to work out the tax you owe (covered next). Second, the rate that applies to you depends on your exact relationship status, so check your own situation against the Work and Income rates ²³. If you'd like to see how the timing of starting NZ Super fits your plan, our guide on when you can retire in NZ walks through the milestones.

What tax code should you use when you have both super and wages?

This is where most phased-retirement tax surprises come from. Both NZ Super and your wages are taxed at source under PAYE, and each payer only knows about the income it pays you. If you use a primary tax code (like M) on both, neither payer accounts for the other, so not enough tax is deducted overall and you can face a bill at the end of the year.

The fix is to use a secondary tax code on the lower of your two income sources ⁴. Common secondary codes are S, SH, ST and SA, and which one applies depends on your total income from all sources. The idea is that your main income source uses the primary code, and the second source uses a secondary code set at the right rate for your combined income, so the total is taxed correctly across the year.

For most people in a phased retirement, NZ Super is the steadier of the two, so the primary code often goes on whichever income is larger and the secondary code on the smaller. Inland Revenue has a short online tool to help work out the right codes for your situation ⁴. It is worth getting this right at the start rather than discovering a shortfall later. Tax codes are an IRD matter, and if your circumstances are complex it can be sensible to check with IRD or an accountant.

Do you still get KiwiSaver employer contributions after 65?

Once you turn 65, compulsory KiwiSaver contributions no longer apply. Neither the employee minimum nor the compulsory employer contribution is required after age 65, though some employers choose to keep contributing as a matter of policy or goodwill ⁵.

So if you keep working part-time past 65, whether your employer keeps paying into your KiwiSaver is up to them. It is worth asking your employer directly what their policy is, because practice varies. If they do continue, those contributions are a useful top-up while you are still earning. If they don't, you can still contribute yourself if you want to keep building the balance.

The annual KiwiSaver government contribution also stops once you reach the age you can withdraw. The top-up is available between ages 16 and 65 only ⁷. For the year ending 30 June 2025, the maximum was $521.43, at 50 cents per $1 you contributed, so you needed to put in at least $1,042.86 of your own money to receive it in full ⁶. Once you are drawing your KiwiSaver down in retirement, that annual top-up no longer applies ⁷.

KiwiSaver is a long-term savings scheme. Government contributions, contribution rates, withdrawal rules and tax (PIR) settings are set by the Government and can change. Figures are correct as at 19 May 2025. Check current rules at ird.govt.nz, kiwisaver.govt.nz and sorted.org.nz, and the relevant scheme's Product Disclosure Statement.

Should you keep contributing to KiwiSaver while drawing it down?

Once you turn 65 you can withdraw from KiwiSaver, leave it invested, set up a regular drawdown, or do a mix. A question that comes up in a phased retirement is whether it makes sense to keep paying in while you are also taking money out.

There is no single right answer, because it depends on your circumstances. A few things to weigh up:

• The government top-up has stopped. Below 65, contributing was partly motivated by the annual government contribution ⁶⁷. After you can withdraw, that incentive is gone, so contributing is purely about whether you want more invested.
• Employer contributions are no longer compulsory. If your employer has chosen to keep contributing, staying in KiwiSaver as an employee captures that. If they have stopped, the case for contributing through payroll is weaker ⁵.
• Paying in and drawing out at the same time can be tidy if you want a regular income stream from KiwiSaver while still adding any spare part-time earnings, but it can also just add complexity for little gain. For some people, contributing less and keeping cash accessible is simpler.
• KiwiSaver is still an investment. Its value can rise and fall, so money you'll need to spend soon is usually better held more conservatively than money you won't touch for years.

For most people the bigger decision is not whether to keep contributing, but how to structure the drawdown itself: how much to take, how often, and from which fund type. Our guide to KiwiSaver drawdown options in retirement covers the mechanics in more detail.

Returns are not guaranteed. The value of investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future performance.

How does part-time income change how much you need saved?

Earning a part-time wage during the early years of retirement does two helpful things at once: it reduces how much you withdraw from savings, and it gives the savings you don't touch more time to grow.

Consider the order of your income layers. NZ Super sits underneath everything as a guaranteed base of about $27,998 a year after tax for a single person ². A part-time wage sits on top of that. KiwiSaver and other savings only have to fill whatever gap remains between those two and your actual spending. In a year where part-time wages are healthy, that gap might be small or even zero, meaning little or no drawdown. As your hours reduce over the following years, the KiwiSaver drawdown gradually rises to take the place of the shrinking wage.

The practical effect is that every year you stay partly employed is potentially a year you barely touch your KiwiSaver, or even keep adding to it. Money left invested has more time to compound, and you have fewer total years of full drawdown to fund. This is one reason phased retirement appeals to people worried their savings might not stretch across a 25 to 30 year retirement.

It is not a free lunch. You are trading some leisure time for financial breathing room, the income is not guaranteed (part-time work can dry up, and health can change), and investment values still rise and fall. But as a way of reducing pressure on a savings pot, a few years of part-time earning can make a real difference.

How do you structure a phased wind-down over several years?

There is no fixed template, but a common shape is to reduce hours in steps while gradually shifting the weight of your income from wages towards NZ Super and KiwiSaver. The table below illustrates how the layers can move over time. It is an example only, not a recommendation.

A few things tend to make the transition smoother:

• Sort the bridge years first. If you want to drop hours before 65, you'll be funding part of your income from savings until NZ Super starts. Our guide on retiring before 65 and the bridge years covers how people manage that gap.
• Get your tax codes right from day one so the combination of super and wages is taxed correctly across the year ⁴.
• Confirm your employer's KiwiSaver policy after 65 so you know whether contributions will continue ⁵.
• Review the plan annually. Your hours, health, spending and the market will all change, and the right drawdown this year may not be right next year. Pairing your plan with current NZ Super rates each April keeps the figures accurate ²³.

The aim is a wind-down that matches your energy and your finances, rather than a hard stop on a single date.

Frequently asked questions

Can I work full-time and still get NZ Super? Yes. NZ Super is not income-tested, so you can work full-time, part-time or not at all and still receive the full payment once you qualify at 65 ¹. Your wages do not reduce it. They do affect your overall tax, so you'll need the right tax codes across your income sources ⁴.

Will my part-time wages reduce my NZ Super payment? No. Because NZ Super is not income-tested, earning a part-time wage does not abate or reduce the gross payment ¹. This is different from many other forms of government support. The amount you receive depends on your relationship status, not on what you earn ²³.

What tax code do I use for NZ Super and a part-time job? Use your primary code (such as M) on one income source and a secondary code (S, SH, ST or SA, depending on your total income) on the other, usually the smaller one ⁴. This stops you being under-taxed and facing a bill later. Inland Revenue's online tool can help work out the right combination for your situation.

Do I still get KiwiSaver employer contributions if I work past 65? Not automatically. Compulsory employer and employee contributions no longer apply once you turn 65, but some employers choose to keep contributing ⁵. Ask your employer what their policy is. You can also keep contributing yourself if you want to, though the annual government contribution stops once you reach the age you can withdraw ⁷.

Should I keep paying into KiwiSaver while drawing it down? It depends on your circumstances. After 65 the government top-up has stopped ⁶⁷ and employer contributions are no longer compulsory ⁵, so contributing is purely about whether you want more invested. Some people keep adding spare part-time earnings; others find it simpler to focus on the drawdown. This is general information, and the right approach varies from person to person.

How much can I earn while on NZ Super? There is no earnings limit for NZ Super itself, because it is not income-tested ¹. You can earn as much as part-time (or full-time) work allows without affecting the payment. The only thing your earnings change is your tax position, so getting your tax codes right matters ⁴.

This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Before acting, consider whether it's right for you and seek advice tailored to your circumstances. 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). Smiths Financial does not provide tax advice; tax codes and end-of-year tax are matters for Inland Revenue or an accountant. Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 19 May 2025.