Wednesday, April 24, 2024

Research shows how reliant seniors are on NZ Super

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Retirement Commissioner Jane Wrightson.

Nowadays, 40 per cent of people aged 65 and over have virtually no other income besides NZ Super.

And another 20 per cent have only a little more.

Even with NZ Super, close to one in three New Zealanders don’t think they will have enough for retirement unless they continue working past 65.

NZ Super is especially important for those people with disabilities, who are carers, have had irregular periods of paid work, or been low paid throughout their working lives.

In many cases it can provide a greater level of financial security than some people may have experienced before.

Te Ara Ahunga Ora Retirement Commission has undertaken research to better understand life for New Zealand’s older citizens, as part of their three-yearly Review of Retirement Income Policies.

Six focus groups provided in-depth insight into the lives of people aged 65 or older in New Zealand.

A common theme was how important New Zealand Superannuation is to those over 65.

A male participant from the North Island said, “I’d probably be living on the streets without it.”

Another, based in Auckland, joked about having to resort to “bank robbing” if he didn’t have access to it, but is: “… very grateful for it, it’s not enough, but I’m very grateful.”

There is indication of a growing divide, where those who have been able to invest continue to grow their investments, while those who haven’t been able to save or invest, often due to life shocks, are substantially impacted by cost-of-living increases.

The Treasury analysed New Zealand’s Household Economic Survey (HES), which highlighted how housing costs represent a large proportion of people’s New Zealand Superannuation.

The analysis showed superannuitants still paying rent are much more likely to be spending 40 per cent or more of their NZ Super income on housing, and long-term trends suggest more older householders are likely to be renters in the future.

The picture was worse for those still paying mortgages, with 80 per cent spending more than 40 per cent of NZ Super on housing costs and more than half spending more than 80 per cent of NZ Super on housing costs.

Retirement Commissioner Jane Wrightson says these latest insights provide further evidence that NZ Super remains of significant value to most New Zealanders over 65.

“The most important aspect to NZ Super is that it is part of a stable and consistent policy that allows people to plan over a long period of time. Trust and confidence in the system is vital,” Wrightson says.

“What we’re seeing more of today is a growing number of older people needing to continue working longer because they still have mortgages to pay, are renters, or haven’t been able to save enough.

“NZ Super provides them with an essential lifeline.”

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