The retirement risk most Kiwis aren’t warned about: dying with too much money

Wednesday, 27 May 2026

Joseph Darby is the chief executive of Become Wealth and a financial adviser. The views expressed are his own.

OPINION: Most retirement planning commentary in this country is built around one fear: running out of money. For a meaningful share of New Zealanders approaching or already in retirement, the bigger risk is the opposite. They will, on the evidence, not run out. They will die with more than they retired with, having quietly under-lived the best decade of their lives because the prevailing commentary trained them to fear a problem they were unlikely to face.

The cohort this applies to is specific: mortgage-free homeowners with roughly $400,000 to $1.2 million in cash, KiwiSaver and other investments, qualifying for full NZ Super at 65, no major debts or dependants. It does not apply to renters, to those without full NZ Super entitlement, or to anyone whose KiwiSaver balance is the only thing between them and the lowest rate of Super. Different risks, different articles.

The pattern is consistent across hundreds of New Zealand retirement plans. Clients who retired around 65 with what they considered a modest balance are arriving at 72 with more than they started with, paired with a vague unease about spending any of it. The mechanism is psychological as much as financial. Thirty years of saving builds a habit and an identity. Retirement asks people to reverse both in a single calendar moment. Most cannot. The instinct that built the balance is the same instinct now preventing them from using it.

The Retirement Commission's Older People's Voices 2024 research, surveying more than 1,450 New Zealanders aged 65 and over, found that the bulk of asset-holding retirees are reluctant to crack open their nest egg. The New Zealand Society of Actuaries' Retirement Income Interest Group modelled common drawdown rules in its December 2024 paper and found that under conservative ones, retirees in this cohort have a high probability of maintaining their target income past 100. The conservative default does not produce a comfortable retirement. It produces a generous inheritance.

Two things make this peculiarly a New Zealand problem.

The first is NZ Super. Universal, indexed, paid for life, not means-tested. A single person living alone receives around $555 a week after tax at standard rates; a qualifying couple receives roughly $854 between them, with entitlements varying by tax code and living arrangement. The mechanism matters more than the figure. NZ Super covers most essentials for a mortgage-free retiree, and the public health system removes the catastrophic medical-cost risk that dominates US retirement planning. Because the drawdown rate required for lifestyle alone is materially lower than for lifestyle plus survival, the probability of running out falls sharply. The worst-case fear, for this cohort, is solving the wrong problem.

The second is imported anxiety. The 4% withdrawal rule of thumb was developed in the United States in 1994 using American historical data, for a system without a universal state pension. Much of the running-out-of-money commentary in circulation here is based on retirement systems that look nothing like ours. Applied to a New Zealand balance sheet, with NZ Super covering the essentials and universal healthcare removing the largest tail risk, the same advice produces an over-corrected outcome.

The cost of over-correction, made concrete.

Take two retirees, both 65, both with $800,000 plus Super, both spending thirty years in retirement. The first draws conservatively from day one, takes around $35,000 a year on top of Super, never quite lets go. The second phases it: roughly $55,000 a year through the late sixties and early seventies, scales back through the late seventies as energy drops, settles into a quieter pattern in the eighties. Both portfolios last the distance. The difference is the second retiree took an overseas trip each year for a decade, helped a child into a first home, and used the years their body and brain still let them. The first left around $200,000 unspent at death. Illustrative figures, not a forecast.

The pattern is supported by data. New Zealand retirement spending typically peaks in the late sixties and declines from there, with a more pronounced fall through the late seventies. People in their eighties do not, on average, spend what people in their late sixties do. Long-haul travel becomes unappealing. The dinners shrink. Modelling retirement as a flat thirty-year line of withdrawals, the implicit assumption in most online calculators, fights the actual shape of how people live.

There are reasons to spend conservatively, and they should be acknowledged. A single person, particularly a woman with robust life expectancy, may face twenty-five or more years on the lower NZ Super rate, and the maths is tighter. Renters face housing cost risk through retirement which homeowners do not. People with a family history of dementia or long-term care needs have legitimate reason to hold more in reserve. The argument is against caution being the default for everyone, not against caution itself.

Two simple tests. First: if a retiree's total asset base is larger at 70 than it was at 65, and NZ Super has covered most of their essentials throughout, they are likely underspending. Second: if annual investment returns have exceeded annual withdrawals for three consecutive years, the same conclusion applies. The corrective is not to spend recklessly; it is to phase deliberately, with more conviction through the active years and scaling back as energy drops.

The retirement industry has spent a generation telling New Zealanders to save more. Many of them listened, did it well, and have arrived at retirement better prepared than they realise. The harder message, and the less commercially convenient one, is the one most of them now need: spend it.