Ep. 4: What happens with your KiwiSaver account when you turn 65?Ep. 4: What happens with your KiwiSaver account when you turn 65?

Brooke Roberts

Kia ora, ko Brooke toku ingoa.

I’m Brooke Roberts, one of the CEOs of Sharesies.

Welcome to The Payoff, the KiwiSaver series about creating a future that’s more you.

In this episode we find out what it’s like to reach 65.

Pio Terei

I’ve never been so busy and I intend to stay busy.

Brooke Roberts

And as with a lot of things in life, it’s not always what you expect. We’re living longer, and we’re more active.

Pio Terei

A lot of society is recognising, I'm not sure in my case, but the wisdom and the work ethic that people of this age actually bring to the table.

Brooke Roberts

And we throw a bunch of less well-known KiwiSaver questions to Tom Hartmann from Sorted.

Tom Hartmann

This is for really stressful, dire circumstances and should be as a last resort.

Brooke Roberts

The years when we’re working less or not at all don’t mean not having a purpose.

And there’s always our hopes and dreams.

So what’s retirement really like in Aotearoa? Do most people stop working when they hit 65?

Brad Olsen gives us a little background.

Brad Olsen

If you go back to sort of the 80s and early 90s, I'm pretty sure that once you turn 65 there was only sort of maybe 10–15% of those people that still kept working. These days, you've got around half of all of the 65 to 69-year-olds that are still working in that period.

So, quite a lot still sort of continuing. Maybe not on the tools. Maybe they're not sort of hardcore builders anymore, but they're sort of, they're doing something still in the workforce.

You still look though at over 70s and you've got probably nearly 20% that are still working in some way, shape, or form.

So, still a lot of, I think changes over time we're living longer. Therefore people are keeping engaged more, but over time generation by generation it's becoming, I think more difficult to retire. You know, you really need your KiwiSaver because life is expensive.

Brooke Roberts

Even that word ‘retirement’ can be a little controversial.

Pio Terei

Oh, I think it's, oh dear. No, I'm gonna say it. It's like the first nail in the coffin, bro. It's like rolling over.

Brooke Roberts

Pio Terei is a Kiwi legend.

Pete & Pio clip

Good evening ladies and gentleman, it’s certainly nice to have your company.

Brooke Roberts

Many of us grew up watching him on shows like Pete & Pio.

Pete & Pio clip

Pio we don’t need all that razzamatazz stuff. We’re 90’s sort of guys, y’know?

Brooke Roberts

It’s in the Bag …

It’s in the Bag clip

$100, money or the bag? $200, money or the bag?

Brooke Roberts

And a whole lot more. Our producer Helen, traveled out into the depths of West Auckland to Pio’s Place for a chat.

Pio turned 65 earlier this year, but to him, turning 65 doesn’t change anything.

Pio Terei

How dare some government agency or some big brother says, mate, you're 65. You need to stop working. Well, you can stick that up your nose. Our old people never stopped working. They were busier after 65—if they got to 65.

And I think a lot of society is recognising, I'm not sure in my case, but the wisdom and the work ethic that people of this age actually bring to the table. You know, even if you're pumping gas or sitting on a board, you know, we've seen a lot of life. So I'll be, I'll be falling over not too soon in my work boots.

Brooke Roberts

Pio thinks this stage of life needs a rebrand.

Pio Terei

It should be called freedom or something like that, you know? Ha a watea. So you can go, okay, I've got more time to do other stuff, to fill my emotional tank, to help other people, and enjoy this life.

And you know, to people, to old people, not me, but to people don't undersell how much knowledge and life skills you've got to pass on. That stuff's gold, and you can really alter a person's hīkoi, or journey, or whatever, by just dropping those nuggets of gold, and we, we are all valuable. And we've got some, we've got some shit to say, bro.

Brooke Roberts

Over the course of our lives there are the big events; 21st’s, engagements, weddings, buying a house, having a cat, getting divorced … wait what?

OK, we’re not saying this happens to everybody, but you never know…. So let’s find out. What happens to your KiwiSaver if happily ever after, only makes it part way.

Tom Hartmann

So... Your KiwiSaver is relationship property. This is really important to know, but only the amounts you contributed during that time that you're together. And any gains as well that you made for that, so any returns you made from that money.

Brooke Roberts

This is Tom Hartmann the personal finance lead at Sorted.org.nz.

Tom Hartmann

So, uh, per the law, um, specifically the Property Relationships, uh, Act. Relationship assets must be split 50 50. So that means your KiwiSaver could be broken up and paid to your ex, uh, in a, in, for example, in a divorce. But what happens in practice is actually sometimes, uh, quite different. We suspect that assets are, are not being valued and especially future valued, um, so that there are inequities that result.

So for example, somebody might, one half of the partnership might try to protect their KiwiSaver and say, actually, okay, you can have the car, but then we won't withdraw it from KiwiSaver, but they're very different assets. One side gets the car, but a car is a depreciating asset whereas KiwiSaver is appreciating over time, and so that future value is not taken into account at all.

So we're looking into this a little bit more on the Sorted team to see what actually people are doing, but it's really important to be savvy about what's going on here.

Brooke Roberts

Tom will have some more answers to these curly questions later in this episode.

But let’s head back to Pio to talk about his relationship with money.

Pio Terei

I've actually been pretty good. Maybe it's just coming from a blue-collar background, you know, mum and dad and a Māori affairs home out here in West Auckland. Even though we were rich in other things and, you know, a very loving family.

But I think we were very good and we had a good work ethic. Me and my brother and, and all my mates were the same. And we just, you know, they either went to university or they went to, to trades and stuff. And first thing, see, I didn't have to buy a car, okay? This will probably surprise you, but I was a purveyor of quality used motor vehicles, which is a used car salesman when I was about 18 or 19. So I had a company car, I played in a band on the weekends. So I didn't really have, you know, that first purchase, that big purchase as a car. And I played on the weekends so I wasn't going out drinking and stuff like that.

So my environment allowed me to create a nest egg, really.

Helen Matterson

What did you do with the nest egg? Did you just put it in the bank?

Pio Terei

No, I bought a house at 20. Yeah, it is wild for a Māori boy, you know. And I'm quite, I'm always proud of that. And I, listen to this, this will make you sick, young lady. I bought a four bedroom villa slash bungalow in Sandringham for $23,000, which is just showing how old I am!

Yeah. But the other thing is, in that industry I was around people who knew about money. So, you know, because I was working with guys who bought and sold cars, they knew the finance game, so I was learning a language around finance at a young age that was incredibly helpful. So a lot of my wider whānau wouldn't have been exposed to that environment.

Helen Matterson

Did you ever think about investing it in a certain way or so, what did you actually do with your, your nest egg if you like?

It's always been real estate, which is such a Kiwi thing, eh? And you know, we have this, I was gonna say fortunate. No, we are clever enough to have this lovely property now in bits and pieces, but I, there's another side of me too, and the side of me that has changed is how much do I actually need? And is comfort detrimental to the way I live my life?

Do I lose my edge because I'm too financially comfortable? And I'm not, you know, I'm not a wealthy person financially, but, and all those other things that I think are an important balance. I'm a millionaire. I can go out, I could have this morning, but you guys are here. I could go out in, in, in, in a humble vehicle with my surfcaster to one of the best beaches in the world.

Catch a snapper, come, you know, all those things that I think are really wealthy, but you can't do those things without a foundation of comfort.

Helen Matterson

Yeah, it's having that, I don't know, a little bit of money, little bit in the nest egg, whatever you call it.

Pio Terei

Well, it gives you choice and choice. Not having choices like being in prison, forget that.

Helen Matterson

When did you get into KiwiSaver?

Pio Terei

I do two days a week. Plug, plug at the parenting place in Green Lane, and I was part of it, so I got into it late. But man, it doesn't take long. And I'm starting to look pretty good, with me KiwiSaver. I'm thinking, oh, there's a brand new Double Cab Hilux there.

You know, when you look at our old people and they'd make pataka. And they'd, they'd harvest the kumara, matatini, all those things. They didn't, just didn't eat it all. They saved it for sustainability, eh? So, you know, even though we’re talking flash and all these sorts of things, it's a concept that it should be a part of our way of life.

Helen Matterson

Yeah. So 65?

Pio Terei

Yeah.

Helen Matterson

How does that feel?

Pio Terei

Well, I'd like to write to Jacinda and say, I'd like to get all the back payments or even the interest of the money that wasn't collected by Māori men who never made it to 65.

Helen Matterson

Wow.

Pio Terei

I've paid a lot of tax and I've worked hard, so I'm gonna get my money and top up my KiwiSaver. Cos I don't want this to sound arrogant and it's not, but I don't actually need that money. Or why don't you give it to somebody else? Well hey, hang on, I've got a whānau. You know, I've got ideas and I do things that are positive for our communities up north. So I will utilise that money to fund those sorts of things, you know?

Okay, so with that KiwiSaver, right? I can buy another tiny house, just the shell. I can slowly do it up because I've got mates and I suck at that stuff. Put a kitchen in blah, blah, blah. And then I can offer it to somebody, one of mokos, or my or distant relations who's gonna to university in Auckland, who wants to stay there. They get a cheap rent. So suddenly that KiwiSaver is giving me an income. You know, so that’s the, oh wow, I've got this Kiwi. Oh, well what are you gonna do with it? Or are you gonna pull it out? Well, I don't need to pull it out, but if I pull it out, it’ll only be put in a place where it can generate income.

Helen Matterson

So you’ll keep it in there? A lot of people when they’re 65 they take it out. But a lot of people are realising it’s not a bad thing to keep at least some of it in there, anyway.

Brooke Roberts

Pio says he wouldn’t pull his money out of KiwiSaver unless it is going somewhere it can generate income.

Mary Holm reminds us, thinking you don’t need KiwiSaver after you turn 65, is a big misconception.

Mary Holm

They said, oh, KiwiSaver is for under 65’s. I'm, um, it's too late for me now. I'm 62. Or, or whatever. And my response to that is whatever age you are, you can now join.So if you're 80, you can join KiwiSaver. And I would recommend people do, actually. The thing about approaching 65 at 65, the government contributions stop.

And so that makes it a lot less appealing. And employer contributions, if you're an employee, legally, the employer doesn't have to make contributions to your account after you turn 65. But in my experience, a heck of a lot of employers do. They don't. They think it's too mean to just stop at 65, and so they continue to contribute.

But even if you are past 65 and you're not an employee, it's a really good place to put your retirement savings. Partly because the fees tend to be lower than they do on other managed funds.

Brooke Roberts

Before we head back to Pio, let’s get into one more of those curly questions—the hardship withdrawal.

Here’s Tom from Sorted to explain more:

Tom Hartmann

The key thing to know there is that withdrawing for significant hardship really is about when you can't really meet your bills, when you can't put food on the table.

Like, this is for, um, really stressful, dire circumstances, and should be as a last resort. Because when you withdraw, you're really stepping away from all the future growth. That, that money in KiwiSaver can, uh, get those investment returns. So, it's really important that a KiwiSaver withdrawal is not for paying off debt.

It's not for paying off things like credit card debt, or fines, or debt collection, or hire purchase. Any of those things. But, when it's appropriate, it's actually really good. And I think it's really good for our well-being that we know that if things got really bad, we have those piles of money there.

Brooke Roberts

So it’s nice to know that option is there, but as Tom mentioned, it really should be the last resort.

Back to Pio, who has some thoughts on the importance of planning for your future.

Pio Terei

You know, there's an old pākehā proverb, or whakataukī. My pākehā whānau used this, whakataukī. And they say life is short. Unfortunately, for some people it is, but in general it's bloody long and you don't want it to suck. That's basically it. So if you've got some planning and some solid foundation to build a good lifestyle, that has got to be the way to go.

Life is long cuz, and it's getting longer. It's getting longer. The average age, you know, oh, so and so passed away. You know, she was 73. Oh, that's young. You know my, my mother-in-law who's who lives in the cottage next door, round of applause from all the listeners, she's 85 still driving a little car and you know, still having a vino on a Friday.

You know, and she'll be here for ages, so make sure you are here for a long time and a good time—you don't even have to put much away. I'm not a finance guru by any stretch of the imagination, but if you put, you know, even a, a, a box of beer away. Or Tuesday and Thursday is my no coffee day, and I love my coffee day, you will see that change, especially if you are in your 20’s. It's awesome.

Brooke Roberts

Pio encourages us to think about our retirement sooner rather than later, especially given our ageing population.

Pio Terei

I can get superannuation payments, right to all you fellows out there under the age of, I'm not sure it won't be here. Because the pyramid is turning upside down. Okay, so the pyramid is a wide base of people supplying a smaller point of people that are elderly, right? Turn that pyramid upside down. You've got a narrow base of people trying to support a wider base of people who have lived longer. The numbers don't work cuz so it won't be there.

Brooke Roberts

We asked Pio, if 65 is what he thought it would be.

Pio Terei

I feel good. Yeah. And I'm glad I feel good.

Helen Matterson

Did you have any dreams about what you, you wanted to do in your latter years?

Pio Terei

No, not many dreams and more dreams now. I'd like to spend more time up north and continue my work with parenting, and motivating, and turning people's switches on, and reminding them why, if you’re sitting in a negative place, that you know, maybe picking that apart and saying this is why you're sitting in a negative place. And it's not all your fault, bro. So when people see the picture you know, we can make a difference eh, that's a good way to spend, spend your time.

Brooke Roberts

Such a great chat with Pio, and it’s inspiring to think about what that stage of life could be. But on to the last of our curly KiwiSaver questions. Let’s think about what happens to your KiwiSaver if you pass away. Here’s Tom from Sorted.

Tom Hartmann

If you die while you're a member of a KiwiSaver scheme, your, your full account balance, you know, transfers, uh, it'll be paid to your estate.

Um, it's important to know here that you can't really nominate who's going to get your KiwiSaver money. It's going to be paid to your estate. Your provider can't give it to someone. Uh, and this is the importance of a will, uh, actually lots of people, uh, don't have one, but if you want particular people to receive the proceeds of your KiwiSaver account, you should, if you haven't already, you know, put together a will and make sure that you have instructions there on what you want to happen with that.

Brooke Roberts

So what did we cover in this episode?

Here’s 3 takeaways.

One: retirement, or it might be transitioning from full-time work, could take years. And it can be full of purpose driven mahi. But to do this, and have choice and options, you need to plan.

Two: we learnt that your KiwiSaver is’ relationship property', so others may have dibs on part of it—if you break-up.

Three: you can still have KiwiSaver when you’re over 65. You won’t get the government contribution, but you might get your employer’s if you are working and the fee structure makes it worth keeping your money invested in this way. And you can withdraw as you need.

Brooke Roberts

Next time on The Payoff, we’ll get practical.

How do you choose who manages your KiwiSaver?

Tom Hartmann

We don’t really tell people to shop around for a provider. We tell people to shop around for a fund.

Brooke Roberts

We’ll go behind the scenes of a KiwiSaver fund manager to find out how they’re looking after your life savings.

John Berry

There’s always conversations going on around economies, events happening, how it’s going to impact the markets.

Brooke Roberts Plus some tips on how to keep your nerves in volatile markets.

Simran Kaur

Should I go into a conservative fund, like everything’s dropping.

Brooke Roberts

And we’ll look at the future of KiwiSaver.

Brad Olsen

It’s literal tens of billions of dollars now that we’re talking when it comes to KiwiSaver funds under management.

Brooke Roberts

Where could it be headed?

Mary Holm

The rich get richer and the poor get poorer, I would love to see that change happening.

Simran Kaur

It’s hard to imagine why it’s so important when you haven’t seen it, so we will be that generation for our children and our grandchildren.

Brooke Roberts

That’s coming up on The Payoff.