Should you use KiwiSaver to boost your deposit?

Have you been a contributing KiwiSaver member for at least three years? 

Then your very first step on the property ladder may be closer than you think. 

Just like First Home Grants, KiwiSaver early withdrawals are a welcome helping hand for many first-home buyers looking to build their deposit.

But before you decide to use this tool, it’s also critical not to let the dream of home ownership get in the way of your long-term goals – your retirement savings.

Are KiwiSaver withdrawals worth it? Have a read of these tips to learn more. 

Young Kiwis are signing up

According to recent data from Westpac, an increasing number of young Kiwis are joining KiwiSaver to save for their first property.

That was the main reason mentioned by 74% of young New Zealanders aged 18-24, compared to 59% of Kiwis aged 25-29, and 16% of people aged 35 to 54. At the same time, only 24 percent of 18- to 24-year-olds said they had worked out how much they would need in retirement.

With house prices on the high side, and old age probably being less of a priority for people in their 20s, the focus on property shouldn’t be a surprise. But, even at this young age, it’s a good idea not to let planning for the long-term slip through the cracks.

The cost of withdrawing from KiwiSaver

Eligible first-home buyers (click here to read the criteria) can withdraw all but $1,000 from their account (with a few minor exceptions, i.e. money transferred from Aussie Super).

However, the bigger the withdrawal, the greater the impact on your long-term retirement savings could be. This is based on a combination of factors, like your age, the fund you’re in, and the amount withdrawn.

A numeric example* may help:

John has been saving since he was 18, starting with earnings of $40,000 a year and investing in a fund earning 7.5 percent after taxes and fees. John could expect to enter retirement with $1.16 million. However, if John were to withdraw all of his funds (except $1,000) at 30 to purchase his first home, he could end up with only $428,000 at retirement.

Property and financial well-being

Having said all that, there are valid reasons to consider home-ownership.

Owning your own place can be a great step towards wealth generation and financial security. As time passes, your home’s value will likely increase and create equity in your home. Plus, once you’ve paid off your home loan, you’ll free up a great deal of income.

When pondering your options, make sure you take every element into account.

Are you in the right fund for your goals?

Westpac’s survey also found that only 44 percent of Millennials had a proper understanding of their KiwiSaver scheme, with 12 percent of them admitting they did not know where their money was invested.

If you want to take advantage of compound interest, making an active choice of fund is the way to go. You can learn more about how to consider your KiwiSaver set-up when saving for a home in this article we wrote.


Whatever decision you’re pondering, including early withdrawals, keep the long-term impact in mind. And please don’t hesitate to take some advice: we can help you set goals and put plans in place to make them a reality.

*Please note that this calculation for illustrative purposes only
An Adviser Disclosure Statement is available free and on request.

Related articles