Should I use my retirement fund for a house deposit?

[Miss Webb]

In NZ we have Kiwisaver, a government retirement savings initiative, which I think is similar to a 401k.

I am currently contributing 8% of my income (the maximum) and my employer contributes 3% onto a conservative fund. I have about 20k in there at the moment.

I am allowed to withdraw money for a deposit on my first home; otherwise I cant withdraw anything until I am 65. If I withdraw for a house deposit the government will give me 5k toward my house deposit as a bonus.

Should I withdraw for a house down-payment  or leave the retirement fund until I am 65 and save other income (which will take longer)? I hope to be retired well before 65 by the way.

[fireferrets]

As a MMM reader, of course you are saving more money than just the retirement account, so it may be beneficial to you to take the dough out of your account and get the $5K government bonus. Don't forget to check into whether you will be taxed on the withdrawal and to account for that, if so.