A growing number of New Zealanders are using retirement savings to cover daily expenses
Financial hardship withdrawals from KiwiSaver have surged to record highs, indicating that many New Zealanders are still struggling to make ends meet, even as official inflation figures show signs of easing.
Infometrics found that over $300 million was withdrawn for hardship reasons in the year to June 2024, a sharp increase compared to previous years. The figure is more than double what it was in 2019 and twelve times higher than the amount withdrawn in 2012, when such data was first recorded.
While the headline inflation rate has declined to 2.5% in the March 2025 quarter, the impact of accumulated price increases over the last five years remains a burden for households whose incomes haven’t kept pace. Prices overall are 23% higher than they were in March 2020.
This financial pressure is reflected in the growing number of people dipping into retirement savings early. In the year to June 2024, over 32,000 hardship withdrawals were processed, nearly double the total from five years prior. The average amount withdrawn also rose significantly, reaching $9,252 – 66% higher than in 2019.
KiwiSaver withdrawals for hardship are allowed under strict conditions, such as being unable to meet basic living expenses, facing mortgage enforcement, or covering the costs of medical treatment, funerals, or palliative care. Applicants must submit supporting evidence to Inland Revenue to access their funds.
Although the total number of KiwiSaver members has grown by 71% since 2012, Infometrics noted that the rise in hardship withdrawals has far outstripped that growth, particularly since 2023. Data indexed since 2016 shows the gap widening between member numbers and withdrawal volumes, suggesting the increase cannot be explained by membership growth alone.
Recent monthly data points to an ongoing trend. From July 2024 to May 2025, withdrawals for hardship reasons were already 44% higher than the previous full-year total. The number of individual withdrawals rose by 52% during the same period. Though figures vary month to month, there is no indication that withdrawals are tapering off.
Geographically, every region in Aotearoa has seen an uptick. Nelson recorded the largest increase in withdrawal value, rising 262% between 2020 and 2024, albeit from a low base. Auckland, which accounted for nearly half of all hardship withdrawals by value in 2024, saw an increase of 162% over the same period. In contrast, Canterbury had the lowest increase at 98%.
Although inflation has eased and the Reserve Bank has lowered the Official Cash Rate to 3.25%, some experts caution that cost-of-living relief may be slow to reach the most vulnerable.
“As we reported in April, we have concerns that price inflation will re-emerge this year with energy and food price rises being felt by households. When prices of essentials such as energy start to rise, everyone feels the pinch – vulnerable households most of all,” Infometrics noted.
It added that low-income households and those reliant on benefits may not feel the effects of an economic recovery right away. Job creation and wage growth in lower-paid sectors tend to lag behind other parts of the economy, further delaying relief for those most in need.
According to Infometrics, any future decline in KiwiSaver hardship withdrawals is likely to be slow and uneven.
