kiwisaver, investing

Can I access my KiwiSaver money early if I have health issues?

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So let’s imagine you have some health problems. 

Maybe you’ve broken an ankle at work and are unable to earn money temporarily. Or maybe, you’ve been recently diagnosed with cancer and you’re wondering if you can use your KiwiSaver money to pay for the treatment. Potentially, a medical problem has surfaced and you’re curious to know what happens with your KiwiSaver money.

If you’re in these sorts of situations, you might be wondering, “can I withdraw my KiwiSaver money early?”

That’s a good question, and is one we’ll be digging deeper into during this blog post.

What does the law say about withdrawing your KiwiSaver money early?

There are about four or five main groups of reasons you could withdraw from your KiwiSaver account early.

Fortunately for those with health problems, your situation falls under one of those groups. However, it also does not mean you can simply withdraw from your KiwiSaver account immediately.

Instead, there is a high threshold you must meet. And additionally, you must file an application with medical evidence to do so. 

According to the IRD, you can withdraw some of, or all of, your KiwiSaver money before the age of 65 if you fall under two groups of circumstances.

  1. Those with severe illnesses, injuries or disabilities

  2. Those with life-shortening congenital conditions

Now, there are some specifics you need to know with each of these groups to make sure you are eligible. 

Just because you think an illness is severe, does not mean the person reviewing your application will agree. This is why you need to make sure you understand the little specifics regarding each circumstance.

So let’s dig into these groups one-by-one and find out what you need to know.

1. Those with severe illnesses, injuries or disabilities

If you have an illness, injury or disability, you may be eligible to get early access to your KiwiSaver money.

However, let us remind you that not any health problem will allow you to withdraw your hard-earned savings. 

The reason for this is because KiwiSaver was made with the intention that you could only withdraw your money at retirement age or to buy a first home, unless there was a very good reason otherwise.

To be eligible to withdraw your KiwiSaver money before the age of 65, any illness, injury or disability must be severe enough that it either:

  • Permanently affects your ability to work OR

  • Poses a risk of death

If you are ineligible under either of these conditions, then you would not qualify under this criterion to withdraw your KiwiSaver money early. However, other criteria such as significant financial hardship could potentially apply to you.

2. Those with life-shortening congenital conditions

I know that’s quite a phrase. And I know it’s a bit confusing.

So, some of you may be asking, “What’s a life-shortening congenital condition?”

According to the KiwiSaver Act 2006, a life-shortening congenital condition is “a condition that exists for a person from the date of their birth and is likely to reduce the life expectancy for persons in general with the condition below the New Zealand superannuation qualification age [i.e. 65 years of age]”.

In other words, if you had a problem like a physical abnormality or a disease from birth and you’re likely to live below the age of 65, you can withdraw your KiwiSaver money early.

What’s the logic behind this change you may ask?

This change was put into law only a few years ago. While most of us can look forward to living until 70, 80, 90, or maybe even older, some Kiwis sadly don’t have a life expectancy of 65. 

This is due to conditions they’ve had since birth. An example would be down syndrome, where the life expectancy of a person with it is around 60 years.

Because of this, KiwiSaver might be near useless for these people. In essence, they’d be putting money away in their account, but they likely wouldn’t end up using it. 

This was considered unfair and hence the rules were changed to accommodate these people.

I meet one of these two criteria. How do I withdraw my KiwiSaver money early?

If either of those conditions apply to you, you can apply through your provider to have early access to your KiwiSaver savings. 

However, if you have a severe illness, injury or disability that meets the criteria mentioned above, you need to know how long you’ve been in KiwiSaver. If you have been in KiwiSaver for less than two months, the IRD says on their website you should apply to them instead.

Applications under this reason require medical evidence to prove you meet the criteria to withdraw your KiwiSaver money early.

If your application is successful, you can potentially withdraw everything from your KiwiSaver account. This includes government contributions.

However, it is possible that you will only be able to withdraw part of your KiwiSaver balance, depending on what the outcome of your application is. 

Would you like some free help with your KiwiSaver money?

If so, make sure to do two things.

The first thing is to check out our KiwiSaver blog. Here, you can read our collection of over 100 KiwiSaver blog posts. 

By reading our blog posts, you can become more informed about some of the finer details of KiwiSaver. We recommend you use our blog posts to help yourself become more financially educated.

The second thing you should do is take advantage of our free KiwiSaver HealthCheck.

Our KiwiSaver HealthCheck gives you the opportunity to understand how to best arrange your KiwiSaver affairs. As a result, you’ll be better prepared for retirement. 

How it works is that you firstly fill out some information in a form. Then you get to have a one-on-one consultation with one of our financial advisors over the phone. And last, you decide whether you’d like to implement the advice we’ve given you.

If you’d like to implement this advice, we can help you out with that. And if not, that’s perfectly fine as well. There are no obligations on your end.

So, make sure to get some free advice with our KiwiSaver HealthCheck and get more financially educated by reading some more of our blog posts. Your future self will thank you.

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Are you with the right KiwiSaver provider for you? Find out by taking our free KiwiSaver HealthCheck!

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