This includes being unable to meet living expenses, such as rent or mortgage repayments, having to modify your home to meet special needs, or paying for medical treatment.
KiwiSaver users are also able to withdraw funds to cover the costs of a dependent family member under the same circumstances, they said.
Rotorua Budget Advisory Service manager Pakanui Tuhura said he had noticed the increase in people withdrawing their KiwiSaver funds for hardship reasons.
"This is a difficult one as each individual has their own reasons for withdrawing," he said.
"Hardship is defined by each Kiwisaver provider and withdrawals are considered and approved, or not, on that definition."
Tuhura said the service would not advise users to withdraw their KiwiSaver funds "in the first instance", trying other avenues to relieve their financial stress first.
"We need to resolve the issues that have created the financial stress in the first place otherwise that person will still have those issues once the withdrawal has been used up," he said.
"Hardship withdrawals are a one-off short-term solution."
Tuhura also said it was important to note that any KiwiSaver withdrawals made for hardship reasons would not include the Government's contributions.
An Inland Revenue spokesperson said if someone applied for bankruptcy, creditors would not be able to access their KiwiSaver funds.
Kylie Overbye, the Rotorua Salvation Army's director of community ministries said her team often had people come in for help when they had "run out of options".
"They've reached a point where even with regular income it can become difficult to make ends meet," she said.
"For some, the cost of living has become so tight that they have no reserves for unexpected costs, or for things that they don't earn enough money to save in advance for."
Overbye said while some were careful about living within their means, for others it was almost impossible to stay afloat.
"People are living one bill away from drowning in debt," she said.
"We find what people start to skimp on when things are getting really tough is food, and it's at that point that people tend to step through our doors seeking help - when they realise they're out of their depth."
"Our team here in Rotorua help folk unpack and identify the causes of their issues," Overbye said.
"We will support them putting together a plan [and guide] them to solutions and support systems available within our services and the wider community."
