1. Feeling Financial Pressure? You’re Not Alone.
Life can throw unexpected challenges — rising living costs, job loss, family emergencies. If you’re feeling financially stuck, you’re not alone. Thousands of Kiwis are in the same boat. But before you dip into your retirement savings, it’s important to understand how KiwiSaver significant financial hardship withdrawals work — and why they should be a last resort.
2. What is a KiwiSaver Significant Financial Hardship Withdrawal?
A KiwiSaver hardship withdrawal allows you to access some of your savings early if you’re facing serious financial difficulty — but only as a last resort. This includes circumstances where you:
- cannot meet minimum living costs such as food and bills
- cannot make mortgage or rental payments
- cannot pay for medical treatment
- cannot meet unexpected costs such as funeral expenses for a family member
The rules around hardship applications are deliberately strict to discourage Kiwis from missing out on future benefits. To make a withdrawal, you must provide evidence of significant financial hardship to support your application and not all applications are approved.
Once withdrawn, it can be difficult to replace the amount — unless you plan to make a significant lump sum contribution in the future. Hardship withdrawals are a short-term fix that don’t address the root causes of financial difficulty — and they come at the cost of your long-term financial goals.
3. Understand the Cost Before You Apply
Yes, hardship withdrawal is possible — but it comes at a cost.
Here’s the catch: If you’re 35 years old and invested in a growth fund with an average annual return of 4.5% (after fees and tax, based on government assumptions – FMA), withdrawing $5,000 today could cost you around $19,000 in long-term savings by the time you retire.
This is called opportunity cost — the potential benefits missed when you withdraw early. It’s a significant long-term consequence for a short-term solution.
That’s why we recommend exploring all your options before considering a withdrawal. KiwiSaver is one of the few long-term investment schemes helping Kiwis achieve home ownership and retirement goals. Once you withdraw, you lose the benefits of compounding growth.
4. What Are Your Options?
- Have I looked into financial support from Work and Income?
- WINZ may offer one-off or ongoing assistance for unexpected or urgent expenses like health, funeral, or emergency living costs. www.workandincome.govt.nz
- Have I considered budgeting or debt support services?
- MoneyTalks offers a free, confidential service connecting you with trained financial mentors who can assist with debt, budgeting, and support options. www.moneytalks.co.nz
- Have I considered taking a contribution break?
- If you’ve contributed to KiwiSaver for 12 months or more, you can apply for a break of 3 months to 1 year. Keep in mind that during this time, employer and government contributions may not apply. www.ird.govt.nz
- Have I talked to a licensed financial adviser?
- An adviser can help you understand your options and create a personalised, long-term plan.
5. Let Your KiwiSaver Do What It’s Meant to Do
Take our free KiwiSaver HealthCheck — it’s fast, secure, and shows if your fund type aligns with your goals. It’s a great way to ensure your KiwiSaver is on track for the future.
6. How to Apply for KiwiSaver Hardship (If You Still Need To)
If you decide to make a withdrawal:
- Contact your KiwiSaver provider to understand the application process.
- Provide proof of hardship (e.g. bank statements, overdue bills, eviction notice).
- Allow 2–5 weeks for assessment. It may take longer if additional information is needed.
- Most providers allow you to apply online via their website.
7. Avoid Getting Here Again: How to Future-Proof Your Finances
Hardship can come unexpectedly, but small steps today build financial resilience:
- Start budgeting and track your expenses
- Build an emergency fund (even $10/week helps)
- Get regular financial advice to support informed decisions
- Explore upskilling and career opportunities to increase income security
If you’re unsure about your KiwiSaver or facing financial difficulty, reach out. National Capital can help you make informed decisions — at no cost to you. Let’s build a more secure future, together.