A large portion of people over the age of 65, having to survive on superannuation alone to get them through retirement, are making extreme cutbacks in spending to cope with cost-of-living challenges.
The Retirement Commission has released new research around what retirement looks like in 2024, two years on since it last looked at the finances of people over 65 in 2022.
The Commission conducted quantitative and qualitative research with more than 1,450 New Zealanders aged 65 and over earlier this year, finding that financial situations for 37% of those surveyed had worsened over the last two years.
Almost half of survey participants (46%) are now missing out on social activities, while 26% said they were putting off medical appointments or treatment.
More than a quarter of those surveyed (28%) were making “radical” changes to their shopping habits, like buying less food in order to try and bring costs down.
While “belt-tightening” for those over the age of 65 on middle incomes has generally been a sufficient way to curb costs, the Commission's report said there was “growing unease” about when things would return to normal as middle income retirees are eroding their nest eggs sooner than they originally planned to.
Older New Zealanders who are on low incomes and completely reliant on NZ Super have moved past “tightening the belt” and into “day-to-day survival” to cope with the higher cost-of-living, the Commission’s report said.
Almost 40% of participants in the Commission’s survey said they were completely reliant on NZ Super for their income compared with 48% of participants who lived with their spouse/partner and owned their homes mortgage-free.
Retirement Commission Research Lead Jo Gamble said people over the age of 65 who were renting, had experienced “life shocks” after 50 or had disabilities or long-term health conditions, and were struggling the most financially.
“These groups typically have fewer financial assets and are therefore less likely to be financially resilient,” she said.
“The findings illustrate the significant financial buffer being mortgage-free provides compared to those renting. In addition, people with investments and/or KiwiSaver were nearly twice as likely to feel their financial situation was comfortable compared to those without.”
The report noted that 43% of mortgage-holders in the survey said they didn’t have any investments, savings or KiwiSaver compared with 10% of people who were mortgage-free.
The Commission’s report said 14% of over 65s didn’t describe themselves as ‘retired’ and over a third (36%) of working older people are still working because of financial pressures.
When the Commission last undertook this research back in 2022, it found 29% of working older people were still working because of financial pressures so that rate has climbed 7% in two years.
Retirement Commissioner Jane Wrightson said there has tended to be a ‘golden assumption’ that people over the age of 65 are “mortgage-free couples living in relative comfort on NZ Super” and this latest research stood as a reminder that things were not always as ‘golden’ as some may assume.
“These insights provide us with valuable evidence to help identify practical policies and interventions that could lead to better retirement outcomes for New Zealanders in the future,” Wrightson said.
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