Login
Written by:
,

KiwiSaver and Lifetime Income serve different roles in retirement. Understanding how they work together can help you make the most of your savings. So here is an article from the Lifetime Income team explaining the differences.

You can read the original article here: KiwiSaver or Lifetime Income: which one, when? Or you can read the article published in full below and tell us what you think in the comments section. 

 

 

KiwiSaver or Lifetime Income: which one, when?

KiwiSaver and the Lifetime Retirement Income Fund (Lifetime Income) both play important roles in supporting New Zealanders in retirement. However, they serve different purposes and are designed for different stages of life. Understanding these differences can help you make informed decisions about how best to manage your retirement savings and income.

 

KiwiSaver: saving for retirement

KiwiSaver is a voluntary savings scheme (voluntary because you can opt out) established by the government in 2007 to encourage New Zealanders to save for their retirement. While it operates under government legislation, KiwiSaver funds are managed by private financial service providers such as banks and investment firms. The government does not guarantee KiwiSaver balances, nor does it protect against investment losses.

Key Features of KiwiSaver:

  • Designed primarily for saving and accumulating wealth before retirement.

  • Contributions can come from individuals, employers, and government incentives (such as annual government contributions for those under 65).

  • Members choose a fund based on their individual risk profile (e.g., conservative, balanced, or growth) and their KiwiSaver manager invests their money accordingly.

  • As the investments earn returns (which can go up or down), these are added to the member’s account. The returns compound over time, growing the member’s savings so by the time they retire they’ve hopefully built up a healthy nest egg.

  • Funds are typically locked in until age 65, with some exceptions for first-home purchases, financial hardship, or serious illness.

  • Withdrawals are typically taken as a lump sum upon retirement, requiring individuals to manage their spending carefully to ensure funds last throughout retirement (some providers may offer a standard income payment option calculated to age 90).

 

Lifetime Income: spending in retirement

Lifetime Income is designed to help retirees turn their savings into a fortnightly, tax-paid income once they retire. It provides a structured way to receive regular payments throughout retirement, ensuring that your funds last for the long term.

 

Key features of Lifetime Income:

  • Designed for spending rather than accumulating savings.

  • Allows retirees to convert their savings into a fortnightly income that is paid alongside NZ Super.

  • Members do not choose a risk level. The Lifetime Retirement Income Fund is a diversified, balanced/growth-oriented portfolio, specifically designed to preserve capital and support regular income payments over 20 years or more.

  • Investment returns are added to the member’s account and regular payments are made. These payments come from both the returns and some of the member’s original capital.

  • The member’s income is reviewed every year (on their birthday) to make sure their investment is still on track to last the long term.

  • No restrictions on withdrawals, giving retirees flexibility in managing their funds.

  • Income is tailored to individual circumstances, factoring in age, gender, tax, life expectancy, inflation, and market conditions.

  • Joint investment options allow couples to receive uninterrupted payments if one partner passes away.

  • Funds not used in retirement are passed on to an individual’s estate or continue as income for a surviving partner.

 

Key differences at a glance

 

 

Which one is right for you?

The answer is both - KiwiSaver and Lifetime Income have their place in retirement planning.

  • If you’re still working and saving for retirement, KiwiSaver is a great tool to grow your wealth over time.
  • If you’re retired or approaching retirement and want to ensure you have a stable income, Lifetime Income helps turn your savings into predictable payments that last.


This article is for information purposes only and should not be considered financial advice. 

 

vg-author-shot

Written by: Vanessa Glennie

Vanessa is Head of Communications at Lifetime Retirement Income. She’s an experienced investment writer, having spent more than a decade writing about financial markets in the global fund management industry.

 

 

Have you thought about Lifetime Retirement Income to look after your money in retirement?  

If you’d like to find out more about any of our retirement income solutions, including Lifetime Income, Lifetime Home and Lifetime Invest, their  locally-based income specialists are on hand to chat. 

So click on the button below and contact Lifetime Retirement Income to find out more.

Lifetime Income

Turn your retirement savings into a regular income

Contact Lifetime

 

Leave a comment