15 September 2026
From Saving to Spending: New Zealand's Next Retirement Challenge
KiwiSaver has spent almost two decades answering one question: how do we get more New Zealanders saving?
Nearly 3.5 million now hold an account, and funds under management have grown from $703 million at launch in 2008 to $138.8 billion today. The mechanism is working - automatic enrolment, employer matching and default contribution rates have helped establish a genuine savings habit at scale, and it's still being strengthened: 16- and 17-year-olds gained access to contributions through 2025–26, under-16s can now be enrolled by a single guardian, and government now contributes during paid parental leave.
Whether current settings will deliver adequate income is separate. New Zealand Society of Actuaries (NZSA) modelling from September 2025 found a median earner on the default 3–4% rate is unlikely to reach adequacy even over a full career, rather adequacy needs a matched 5%, a rate KiwiSaver doesn't currently allow.
The accumulation question, then, is not so much solved as shifting. The focus is moving from "are people saving?" to "are they saving enough to last?"
That second question - decumulation is where the system is furthest behind.
A problem that's waited
Decumulation has surfaced in every election since 2007, generally accompanied with a "wait and see" approach from policymakers and government alike. That made sense while KiwiSaver was young. But the system is now moving into a different phase.
The Retirement Commission’s 2025 review suggests that “wait and see” has run its course: the drawdown phase “remains underdeveloped” even as balances grow, and the Commission recommends a nationally consistent decumulation framework.
What the data shows
More than one million New Zealanders will soon be aged 65 or over. The FMA's latest reporting shows withdrawals by that group rose 10.5% to $3.3 billion this year, while full withdrawals fell 2.9% to just over 30,000.
In other words, more money is leaving the cohort, but fewer people are taking it all at once. More retirees appear to be drawing down gradually rather than cashing out, but there is little infrastructure around that process.
The challenge is therefore not simply how to save a balance, but how to turn that balance into income with enough confidence that it can support a long retirement.
Why the shift feels hard
The data shows what is changing, but not why spending retirement savings is psychologically difficult.
The "retirement consumption puzzle" describes how many retirees end up spending less than they could, even when they’re in a financially secure position. Some can be attributed to loss aversion - a withdrawal can feel like a loss even when fully planned for. Some is uncertainty about markets, health and longevity. Some is identity: decades as a saver make it hard to become a spender.
The Retirement Commission has identified this directly. Drawdown is a one-time, high-stakes process that people have never rehearsed. As a result, many underspend out of caution, whereas others risk hardship by drawing down too quickly.
This is where the technical and emotional sides of retirement planning meet.
Where advice fits
The NZSA has proposed drawdown “rules of thumb”, including a fixed percentage, an inflation-adjusted amount, a fixed end date or life-expectancy-based approach, as the basis for a consistent framework, rather than relying on the development of a local annuity market.
The proposal also recognises that policy should not be designed around a wealthy minority who can afford extensive advice. For many New Zealanders, retirement income will consist of a modest KiwiSaver balance alongside NZ Super.
Advice can help close that gap now. It can replace a single spending assumption with scenario-based planning, separate essential from discretionary spending, and use regular reviews to assess whether a client’s lifestyle remains sustainable rather than focusing only on their account balance.
None of this replaces a system-level framework. But until such a framework exists, advisers who turn “Will this last?” into a concrete plan and who acknowledge clients’ discomfort rather than focusing only on the numbers, are doing work the system has only just started to prioritise.
Where Kernel fits
This is where advice earns trust - not through the fanciest product, but through genuine advocacy at the moments that matter most, as we described in our hybrid advice article.
Decumulation is one of those moments. It involves a series of high-stakes, sometimes difficult-to-reverse decisions made by people who may never have had to make them before.
A strong hybrid model is well suited to this problem. Technology can handle mechanics, running scenarios, tracking spending and flagging reviews, while advisers focus on understanding a client’s circumstances and talking through the discomfort of drawing down for the first time.
New Zealand needs a consistent decumulation framework, and the Commission is right to call for one. Until that framework arrives, advisers and platforms that combine structured planning with genuine client advocacy can help the next generation of retirees spend their savings with the same confidence with which they built them.
