The official agency set up to encourage retirement saving says New Zealanders may need to consider opting out of KiwiSaver for a while if they face a chance of redundancy.
David Kneebone, executive director of the Retirement Commissioner's office, said everyone should aim to have an emergency fund worth three months of their income to cope with possible redundancy.
If necessary, they should reduce high-interest debts, think about not going on holiday this Christmas and consider taking a "contribution holiday" from KiwiSaver.
"We are obviously concerned with the level of unemployment being over 7 per cent," he said.
"Even if you think to yourself 'it won't happen to me', it's worth just dwelling on the prospect. The key message we are trying to put out is don't wait 'til it happens.
The more prepared you are for the prospect, the easier the whole situation is going to be in terms of adjusting your budget."
Work and Income figures show that most people who go on the unemployment benefit stay on it for almost six months. A third (32 per cent) of those on the dole last month had been on the benefit for less than three months, 23 per cent for three to six months, 19 per cent for between six months and a year and 25 per cent for more than a year.
But a survey of 1000 adults in May this year for the Retirement Commissioner's financial behaviour index found that only 38 per cent could access three months' income in an emergency from their own savings.
A further 28 per cent could raise the money through insurance, borrowing or selling something, and 34 per cent could not raise it at all.
"The ideal is that you build up an emergency fund of three months of your income to cover basic expenses," Mr Kneebone said.
He said anyone who could see a possibility of redundancy should consider cutting back some expenses now in order to build up that fund.
"It's worth always making sure you have high-interest debt as low as possible. The interest on credit cards, store cards, car loans and hire purchase can be 15 to 25 per cent. That can be a killer unless you deal with it in the interest-free period," he said.
"It's a tricky time of year and we are very conscious that many people are looking at Christmas Day and thinking they want a holiday, and it's hard when you know that the place you work in is under threat.
"Come the first half of next year it could all go horribly wrong, so you don't want to look back and think, 'God, I wish I hadn't spent that $2000 at Christmas'."
He said people should also weigh up taking a contribution holiday from KiwiSaver, which is possible for anyone who has contributed to the scheme for at least a year. The contribution holiday can last for between three months and five years.
"Contribution holidays are quite simple. Anyone can do that at any time," he said.
"Yes, you will stop getting your employer contributions for that time, and we don't want to discourage anyone from saving for retirement, but if you can see that your workplace is looking dodgy and there is the potential of something occurring in the first six months of next year, then it's a question you need to ask yourself: should I go on a contribution holiday?"
But Mangere Budget Service manager Darryl Evans said KiwiSaver was often the only way his clients could build up any savings. KiwiSaver schemes all had to have hardship provisions for withdrawing savings, although they were increasingly difficult to trigger.
"The vast majority of our hardship applications are getting declined. It's more difficult now to make a withdrawal than ever before."
He had one client recently who crashed his car because of a brain tumour and applied to withdraw $7000 of his $39,000 KiwiSaver fund to buy a new car, which he needed because he lived in a rural area, he said.
"They declined it," Mr Evans said. "I told him to transfer his KiwiSaver fund to another organisation. We made the application to the new company and they granted it."
In case of emergency
Could you access three months' income in a hurry?
34 per cent No
38 per cent Yes, from savings
28 per cent Yes, in other ways (multiple options possible):
selling something 17 per cent
credit card, bank or commercial loan 15 per cent
borrow from friends/family 10 per cent
gift from friends/family 4 per cent
income replacement insurance 7 per cent
Source: NZ Financial Behaviour Index, May 2012
On the web: www.sorted.org.nz/life-events/redundancy