There are 4 situations in which you can withdraw your KiwiSaver money.
1. When you turn 65 years old.
This one is pretty self explanatory. This is so you can live off this big lump-sum payment after you retire.
If you continue to work after 65, that’s great. And you can actually keep contributing to KiwiSaver. The difference is that you’ll be able to withdraw the money whenever you like, while still reaping the benefits of your employer matching your KiwiSaver contributions up to 3% - This is on the condition they’re nice enough to continue contributing, as it’s not mandatory for your employer once you’re 65. If you’re self-employed, you can continue to make voluntary contributions into your KiwiSaver.
2. When you buy your first home
You can apply to withdraw your KiwiSaver money when you go to buy your first home. As long as you’ve been in KiwiSaver for 3 years or longer and have never owned a property before*, then you qualify to receive your KiwiSaver. The main reason for the "application" is so they can make sure you’re actually using the money to buy your first home.
A few things to note:
You have to leave $1,000 in your KiwiSaver account
You don’t actually get the cash in your bank account, the money goes to your lawyer and they pay it directly to the vendor (seller)
You don’t have to withdraw all of it
You need to intend on living in the home, i.e. it can’t be an investment property
*If you’ve already owned a home in the past (but have not withdrawn your KiwiSaver before), you may still be able to withdraw your KiwiSaver money. In this situation you need to contact housing New Zealand and have them determine that you are in the same financial position as a first home buyer (basically they just look at the combined value of your assets). They’ll then give you a certificate to pass on to your KiwiSaver provider - and again it will be up to the provider to make the call on releasing the funds.
3. If you’re experiencing significant financial hardship.
You can actually withdraw your KiwiSaver funds early if you’re seriously strapped for cash.
For example:
You can’t make your mortgage repayments on time, and the bank is threatening to take the house.
You can’t afford to live - This isn’t just having to miss out on a few nice dinners. It means you can’t afford pay for the basic necessities of life.
You need to pay for medical treatment for yourself or a dependent family member, due to sickness, injury, or terminal illness.
How to avoid getting in to money trouble.
A major contributor to financial hardships is the above situation: someone gets sick. This is made even worse if they are one of (or even the only) income earner in a household.
Sometimes people assume ACC will help them out. But remember, this only covers accidental injury, not any kind of sickness or treatment for illness. Learn more about what ACC covers here: https://www.acc.co.nz/im-injured/injuries-we-cover/
Fortunately it’s possible to protect ourselves against these risks. A small amount of insurance, for things such as medical bills and covering lost income, can make a huge difference. This means if something happens, you and your family won’t have to dig into savings, apply for KiwiSaver funds or even remortgage the house just to pay for medical bills and the basic costs of living.
4. If you’re seriously sick or injured
And you don’t have insurance.
You may be able to withdraw your KiwiSaver money if you have a serious illness, injury or disability which means you either can’t work anymore, or may die as a result.
Remember, you’re using your nest egg on this - So once the money has been spent on medical bills etc. - you’ll be back to square one in terms of saving for your retirement.
Do you know what’s happening with your KiwiSaver? For example, who your provider is, and what type of fund you’re in?
To make sure your nest-egg is in the right hands, and in-line with your financial goals, you can have a free chat to one of our advisers. Just click below.