Am I too old to be more aggressive with my KiwiSaver? - Ask Susan

The inquiry posed to Susan Edmunds revolves around the age appropriateness of adopting a more aggressive investment strategy in KiwiSaver. While there isn't personalized advice given, Susan suggests that 46 is not too old to explore a more aggressive approach, contingent upon individual risk tolerance and investment horizon. She emphasizes that aggressive funds, though more volatile and exposed to growth assets, typically offer better long-term returns.

Although Morningstar data indicates an average annual return of 10.3 percent over the past decade for aggressive funds, Susan reminds the reader that these funds can lose up to 30 percent in a year. However, she points out that people are generally advised not to stay in these funds beyond a 10 to 15-year investment period. Nonetheless, she notes that even if a person is older than initially thought, it could still work out if they retain some exposure to growth assets post-retirement.

Regarding another query, Susan clarifies that while technically leaving KiwiSaver funds untouched post-65 would result in them being treated like any other managed fund, it is unlikely to be a practical concern. She notes that discussions are underway about whether access to KiwiSaver should be altered if the superannuation eligibility age changes.

For now, the age of access to KiwiSaver is linked to when New Zealand Super is payable, presently set at 65. Susan also points out that any changes to this are typically announced well in advance and would affect future generations rather than those already retired. She explains that when investing in KiwiSaver, tax is paid on income generated by investments rather than the growth in value, and withdrawing funds does not automatically tax the entire amount.

Instead, tax is applied to the income component, and there's potential to benefit from lower tax rates by moving to a fund with a more flexible tax rate, such as a multi-rate PIE. Susan concludes by advocating for retirees to consider the benefits of New Zealand's Personal Income Rate (PIR) system, which offers tax advantages for retirees with no capital gains tax or other complexities.