Using Sorted's KiwiSaver savings calculator, we can estimate that she could reach close to $321,000 in a balanced fund by age 65 (after fees, taxes and inflation).
Here's a KiwiSaver doughnut:
How would things look if she takes out $35,000 for a first home instead?
At age 65 her balance would be $227,000 instead of $321,000. (She'd likely have paid off her home by then.)
If she waited, at age 40 she might have closer to $86,000 tucked away in KiwiSaver. Using it for a house deposit then would mean she would still arrive at 65 with $149,000.
And if she decided at age 50 to tap her KiwiSaver for a deposit, when she might have $157,000, she would still end up with $82,000 in KiwiSaver at age 65.
That doughnut's getting a bit thin! Plugging these numbers into Sorted's net worth calculator and including the value of a home helps us look into the future and make decisions now.
Why it can make sense
Looking at the current setup in New Zealand to fund people's retirements, it's not hard to see why using KiwiSaver towards a home can be useful.
There's the simple matter of NZ Super, the government pension. This week, on 1 April, the new NZ Super weekly amount will be $390 for individuals and $600 for couples.
That's $20,290 and $31,216 a year, respectively.
Although NZ Super is generous by international standards, those amounts mean it would be hard to cover housing costs along with all the other everyday expenses in retirement.
Many people's mortgage or rental payment is even more than that full amount. So it helps to be mortgage-free before hitting retirement, and using KiwiSaver for a first-home deposit can help us get there - especially early on, like our 30 year old.
If we withdraw from KiwiSaver earlier, we have less to put toward the purchase and a bigger mortgage. But if we withdraw at 50 and it's not enough to buy a house outright, we may end up still having a mortgage at 65 and not so much in KiwiSaver.
Of course, fewer of us are jumping on the property ladder these days, but at least we'll have more in KiwiSaver to rely on than those who tap theirs for a housing deposit. All that time to compound returns should help.
Now we just need to teach the babybot all these considerations... It's still learning, so by all means try to stump it with a savvy question so that the team behind it can keep adding answers. The more it learns, the more of a KiwiSaver expert it will be.
Get Sorted is written by Sorted's resident blogger, Tom Hartmann. Check out the guides and tools from Sorted – brought to you by the Commission for Financial Capability – at sorted.org.nz.
