I put money in to KiwiSaver every time I get paid. When can I actually use it?

---

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.

One condition: you need to have been contributing for at least 5 years before you can withdraw your money, regardless of your age.

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*If you’ve already owned a home in the past (but have not withdrawn your KiwiSaver before), you may still be able to withdraw your KiwiSaver money.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.

A solid financial plan is important. To make sure you don't have to waste your nest egg on avoidable risk, let's get your ducks in a row.

Insuring yourself

There are two main types of insurance

Insuring your stuff - The basics. We're pretty good at this. 

Insuring yourself - This is where most people fall short. What happens to you and your family if you can no longer earn an income? Who will cover the mortgage? How will you afford to live?

---

There are four ways to insure yourself

1. Medical Insurance

• Pays for medical bills if you get sick

• Provides private treatment straight away (no waiting for months)

• Gives you access to non-pharmac approved drugs by subsidising them. (ie expensive cancer treatment)

• Kiwis use medical insurance an average of four times before turning 65

2. Income Protection

• Pays a percentage of your income if you can no longer work.

• Most people are off work long-term due to illness, not accident (therefore not covered by ACC).

• One in five Kiwis will use income protection in their life (even for a short amount of time, it pays to have the option).

3. Trauma Insurance

• Pays a big lump sum of money if you are diagnosed with a serious illness.

• Biggest claim is for cancer - one in three Kiwis claim their Trauma pay out.

• Can be spent on whatever you like ie pay your mortgage off, alternative treatment etc.

• If you don't have an income (ie a stay-at-home parent) this money can be used to replace your income protection.

4. Life Insurance

• Your family gets a big lump sum payment if you die or are diagnosed as terminally ill.

• Gives financial stability to your loved ones, even if you're not around. To pay off debt, and provide ongoing support for your family.

• Who do you want the money to go to? You need to specify in your Will, otherwise, the court decides.