By Ayesha Scott*
Cost of living is – and should be – on everyone’s mind. But how we are managing increasing costs could impact us well into retirement.
As cost-of-living pressures continue to increase with record inflation and rising interest rates for mortgages, increasing numbers of New Zealanders are withdrawing money from their KiwiSaver accounts to survive.
According to last September’s Financial Market Authority’s KiwiSaver Annual Report, financial hardship withdrawals were up 42.8% from 2020.
For New Zealanders struggling to survive in 2022, saving for retirement is likely far from their minds.
It is also these New Zealanders for whom safeguarding retirement savings is arguably the most important, as they are less likely to enter retirement owning their home.
Worrying about retirement
The Financial Services Council’s Money & You report gave insight into how many of us are worried about our retirement savings – namely, being able to afford one at all.
Around 64% of Kiwis worry they won’t be able to afford retirement, while 70% think they’ll need to work past age 65.
So while withdrawals, fees and fund switching due to stockmarket volatility are important savings topics, there is one (admittedly unpleasant) question we all need to ask ourselves. Is our KiwiSaver balance building up fast enough to provide for our retirement?
For the average New Zealander, the short answer is no. We are not on track. That’s before we take into consideration the possibility of future financial shocks, like high inflation.
The gap between retirement and reality
The average KiwiSaver balance is $29,022, as of December 31 2021.
This figure is relatively uninformative by itself.
The Retirement Commission (formerly the Commission for Financial Capability) asked actuaries Melville Jessup Weaver (MJW) to dig into the numbers and provide some context, namely to break down the figures by age and gender.
Unsurprisingly, there is a large gender disparity in KiwiSaver funds – another important topic that has received considerable media coverage since it was revealed.
But there is a more general and pressing concern: the limited savings of people in their 40s.
Why this age group? Put simply, these individuals face high household expenditure with kids at home and, if they’re homeowners, increasing interest rates on their mortgage repayments. If they’re paying rent, that’s likely to be going up as well.
This age group also has less time to benefit from KiwiSaver’s compounding returns before retirement and, despite NZ Super being seemingly guaranteed, retirement is far enough away for a little uncertainty to be prudent.
This group was also already in the workforce for KiwiSaver’s inaugural year, with our current 41-year-old aged 27 in 2007.
Calculating a clearer picture
To gain a better understanding of what is facing this cohort, we need to do two things: first, estimate their KiwiSaver balance at age 65 (using Sorted’s KiwiSaver Calculator) and, second, calculate if this will be enough for retirement.
The average KiwiSaver balance for a 40-something is $36,833 ($32,987 for women, $43,068 for men). Assuming the average wage (to be conservative, let’s use figures from 2017) and investment in a balanced fund, a 43-year-old with a current average balance of $33,331 is projected to have $151,820 by 65. For a 48-year-old with current average balance of $40,335 in a balanced fund, Sorted projects $121,350 by 65.
But is this enough?
The New Zealand Retirement Expenditure Guidelines 2021 are the basis of Sorted’s retirement calculator. Our retirement options are “metro” versus “regional” living, and “no-frills” versus “choices” expenditure.
Let’s assume our average Kiwis are city-slickers (“metro”) and hope for a comfortable standard of living with a few luxuries thrown in (a “choices” lifestyle). Those in regional areas and/or planning to live (very) frugally are likely to spend less in retirement.
This calculation does not factor in other income (such as savings outside KiwiSaver, or working past 65) or having a partner, and we’re (optimistically) living until 90 years old.
After the weekly (singles) NZ Super payment of $463 combined with KiwiSaver funds, our 43-year-old is projected to be $392 per week short of the $1,029 they’ll need per week in retirement. Our 48-year-old is projected to be $427 per week short.
Those considering a more frugal lifestyle ($726/week) are still short after NZ Super and KiwiSaver: $89/week for our 43-year-old and $124/week for those currently aged 48.
Save now or work longer
Kiwis are right to think they are not on track to afford their retirement and that they may be working well past retirement age.
Depending on your personal circumstances, you may or may not be the average Kiwi. It doesn’t matter. We all need to cope with today’s cost-of-living pressures while making sure we’re saving enough for tomorrow. On average, what we are doing now isn’t enough.
It didn’t have to be this way.
While we can’t go back in time and introduce KiwiSaver in the early ’90s like Australia, raising the baseline savings rate from 3% would help. This is not a new idea, with the Commission for Financial Capability recommending a graduated increase in 2016.
Unlike our employee-employer contribution mix where New Zealand employers match their employees’ 3%, Australians also enjoy an employer-paid scheme (currently a 10% rate, by 2025 it’ll be 12%). The current average balance for a 40-something Australian is about $125,000.
But what you can do now is take stock of your own financial situation. Regardless of age, you should do the above calculations yourself. Then, do something about it.
Individuals can contribute to KiwiSaver at a higher rate of 4%, 6%, 8% or 10% and choose the best fund type for their circumstances to ensure that money is working for them. Your future retired self will thank you.
*Ayesha Scott, Senior Lecturer - Finance, Auckland University of Technology. This article is republished from The Conversation under a Creative Commons license. Read the original article.
112 Comments
KiwiSaver is a fraud. It works fine for those who have well-paying unbroken employment from the age of 20 till retirement. It works badly for those who don't, which includes many women who stop work here and there to have babies, and the many, many people whose jobs don't pay well, or are broken by periods of unemployment. KiwiSaver is just awful for the precariat.
Forget KiwiSaver. The state subsidy ('tax credit') should cease.
Demand that NZ Superannuation be increased to provide a dignified retirement for everyone. That will require amending NZ Superannuation tax rates to discourage those who don't need it from signing up for it.
https://cdn.auckland.ac.nz/assets/business/about/our-research/research-…
Exactly. I'm totally against the $16b per year we spend on Superannuation, regardless of need. Particularly when current beneficiaries have done all they can to not pay their way for retirement (e.g. Muldoon). Why not heavily means test it, and as you say increase the rates for those who do need it. For once in their lives people might need to put aside their entitlement mentality.
Also, why are people able to claim it while still working? Middle finger to anyone wanting career advancement within an organisation.
The problem is, the only requirement is age. So it's "unfair" not to get it if other people your age qualify.
Of course, I think my wife's parents getting more from their super than she does from her median income job, whilst both working full-time, is also unfair. But since it's only unfair to the younger people, it doesn't matter.
Looking forward to going in the launch, though :)
Absolutely true. When the dust settles in around 8 years time and we are forcibly living in the "world according to Klaus and friends", Kiwisaver will be seen for the lottery it was. The majority will have given back their years of contributions by way of decimated stock markets and economies.
The real question is why kiwisaver hasn't been reformed?
Why are inputs taxed upon deposit instead of taxed on withdrawal? Why aren't employer contributions mandatory rather than a mere match? Why has the minimal rate not at least 4-5%? Why is it not removed before tax?
The short term thinking dominates how Kiwisaver current operates.
Kiwisaver is a forced saving scheme, we should be aiming to build a similar system to Super in Australia. It is absolutely ridiculous that we use the funds for purchasing houses and saving for retirement, both of which are valid use cases, but we punish the heck out of people for saving in it.
Agreed. Taxing on withdrawal is a simple change that we could make now if we wanted to.
Instead we're having the same old arguments about why a cleaner on minimum wage should be forced to lock up even more of their wages despite huge inflation in the here and now, while trying to say the loud bit quietly.
Imagine being the guy who paid tax on all their contributions, and retiring just as the rules change to require tax on withdrawal.
I guess you could split KS pots into two bins - tax paid and later untaxed contributions and deal with withdrawals appropriately? Not sure it's super simple unless I am missing a more elegant solution.
Yes, I think this will be considered soon enough. There are some that think NZ is not a socialist country but this is not true, it is and this would be form.
For those who are successful financially in NZ they have to pay most of the tax (40% of all net tax in NZ is paid by 4% of the population) then have the benefits of that tax removed because... reasons. (Socialism)
Split Kiwisaver into two "types" of funds:
- Type 1: after-tax contributions (like we have now)
- Type 2: tax-deferred
All existing KS would remain as Type 1.
Let the public decide the mix they want to pay into Type 1 and Type 2 funds, probably with a cap on yearly contributions into Type 2 funds.
Basically like US Roth IRAs vs Traditional IRAs.
Yes, probably more elegant to have a new separate scheme.
I would hate to be the Government department tasked with explaining this to the general public. If people aren't moved automatically then many, particularly those who most need the help, will stay in the existing scheme through inertia.
To be clear, which taxes aren't envy taxes? Income tax is just envy of high earners, right? Petrol duties just envy of those able to afford and drive cars, especially gas guzzlers.
Presumably you must have a list of non-envy taxes, otherwise it'd be a completely meaningless statement.
Nice try - GST, Petrol Tax, Rates.
Graduated (I wont' use progressive as that word has been lost) PAYE has been around a very long time and in NZ we have a medium strength version. I have paid tax in the UK at 49%, plus 17.5% VAT and if buying gas another 19%.
I appreciate you probably think that is fair. Is is not unless you accept it is an envy tax. High earners use less of the government resources than an unemployed person, at worst they use the same as everyone else. So why is it fair they pay more?
As I have mentioned before the net tax take is perverse, 4% of the population pay %40 of the net tax. Why?
Because what a pleasure being gifted both skills and opportunity to be part of the 4% of the population who pay 40% of the net tax. Maybe the remaining 80 - 90% of the population who work could share a bit more of that tax burden if their wages were to rise and that top 4%'s incomes were to fall slightly?
Rates isn't an envy tax? But the chap in the mansion down the road pays more than I do, must be because I envy him. I very rarely pay petrol tax as I mostly bike, this tax must be envy of those guys with the big cars right? GST is proportional to spending, clearly envy of the big spenders?
Sorry for pushing the point, but I really find it an objectional term generally used to shut down discussion of any change.
Regarding the rest of your post, I guess the phase 'you can't get blood from a stone' has some relevance here. If we accept a government needs to raise a certain amount of money, it is going to be much easier to get this from the wealthy or high earners than from the unemployed. The social contract is not user-pays, and personally I consider it as an extremely broad insurance policy against the accident of unfortunate luck in birth or circumstance. I rarely need to draw on government services, but that's because I have been lucky in birth, family and opportunity. I didn't choose any of them.
David Willets pointed out that this particular cohort were the generation most affected financially by the GFC - first losing their jobs, then being supplanted by supplanted by cheaper, younger workers as the world recovered. The first generation poorer than their parents by age.
Being the worst faring for Kiwisaver is par for the course.
Yep but even as someone who who worked three boring jobs to keep my student debt down I can allow that this is simply us joining in with this move across the world. Being sold it by the smarmiest man to have ever lived, who has his full PHD totally paid for was just another special treat.
Raise the retirement age, probably up to 70 over 30 years. Will likely be the only solution and one that isn't untenable given longer human life spans. My father has worked in physical jobs his whole life and at 69 is still doing 30 hour type temp work with a lot of activity (repacking shipments now, he teaches the young guys how to do it smart). And he works still not because he needs to, just because he gets bored and wants to keep active. By the time I get to his age, it's likely he will still be around and also likely I will be in the same boat but will live even longer, so may work until mid 70s.
Already many peer countries have gone to 67 or are slowly making there way up there as is the right thing to do.
We are facing a planet with more and more demands on it. Multiple things have to give, the old status quo is killing us.
who decided that retirement age was 65 - its quite arbitrary really and quite precious to determine that people should be able to retire at that age
and that from that age on the state would provide a big chunk of your "income"
and dont trot out the arguments that taxes have been paid to cover "my right to super" as they have not
Bullshit. My taxes were paid in anticipation of getting the pension. That was the deal (actually the deal was I would get it at 60). And I have paid far far more tax than what I will ever get back from government services which is OK because that was part of the deal too.
To date all the government has provided me is a slap on the arse from the midwife, some schooling from crazed strap-happy teachers, a couple of x-rays and a the loan of a crutch, and a couple of policemen to take away the bloke next door who was beating up his girlfriend.
To come is the pension and a nice doctor who will tell me I am toast.
On top of that I got a pretty decent country to live in. It has only cost me well over $1m in today's money so I am happy enough.
Plus a functioning democracy where the rule of law if widely adhered to and roads are provided to move goods around, and prisons are provided to keep you safe from dangerous members of society, and a justice system, and a pandemic response that saved thousands of lives, etc...
You've been getting a great deal boyo and you're sounding like a spoilt little brat. Without government you'd be fighting for scraps of food in the bins. Have you ever visited a failed state.
Trying to be generic here rather than respond to your comment personally...
Did people of your age cohort also pay taxes in anticipation that their kids would receive 'free' tertiary education?
Or that infrastructure wouldn't be crumbling and their kids generation looking at picking up a huge renewal tab?
Or that so much of this country's silverware has been sold off or sold down and dividends heading offshore?
I guess at central and local government, voters kept getting sucked in by politicians and councillors who ignore the cornerstones of what society needs to survive on in preference of the sugar rush of spend today and let some poor sucker deal with the issues down the road.
Feels like a lot of those issues are coming home to roost now.
Why should someone cleaning at 2am pay taxes to put someone thru university. I think the student loan scheme is probably the fairest way of giving everyone the opportunity of a tertiary education. Remember the taxpayer still stumps up the majority of the cost. Two things I would do is match the numbers being educated in each subject with the requirements of the workforce, and have entry criteria that weeds out likely failures.
Selling off state assets and infrastructure was a terrible idea bitterly opposed by many at the time.
The cleaner will probably need to line up to that trough. Means testing should happen today, not when it suits a particular cohort.
We're struggling to pay nurses and teachers well, but don't batt an eyelid when it comes to the massive super spend. The cruel irony is many nurses are probably struggling because a good chunk of their pay goes towards a pensioner landlord.
Cue the outrage when Transmission Gully comes in $400m over budget, or 2.5% of the total super spend for the year.
Why should someone cleaning at 2am pay taxes to put someone thru university.
So when the cleaner needs a heart operation there's a qualified Doctor to do the surgery, or there's an educated engineer designing the safety systems for the cleaners car.
Its called a society. You ask what your taxes went for, if you lived your life in a country with no taxes, you'd be considerably worse off, or possibly even dead by now.
I wasn't questioning the cost/benefit of funding tertiary education, just whether many parents of the time who'd been paying taxes had some expectation that their children would be able to go on to further education. As an example of their being a difference between what taxpayers think their taxes might be going towards, and what they do in fact end up going towards, or not.
I guess not enough people thought it was a terrible idea to sell off assets, otherwise a line in the sand would have been drawn somewhere to prevent this behaviour continuing. Or maybe that was a black mark with enough voters when John Key used his 'mandate' to sell down the power companies. Just like it might be for Labour with Robertson now essentially using the Super fund as collateral to extend the government's borrowings.
It might feel like that, but there's no actual 'deal'. Super is an entitlement, and the current qualifications for that are being over 65, being a legal resident, and having lived here for 10 years since the age of 20. These could change at any time - as you've noted, the age has changed (presumably since you began work). Super isn't a reward for paying taxes - you get it regardless of whether you have paid heaps of tax or never paid tax in your life. We could have a system that was more like a deal, where (say) a certain percentage of your taxes was specifically allocated to super, and what you got out was based on what you put in. But we don't. Don't get me wrong, I don't think we should raise the age, means test, or any of that - but it's still a mistake to treat Super as some kind of 'deal' taxpayers have made, or something you get as a 'reward' for paying taxes. It's neither of those things.
Sweet. So there's $340k+ of funds sitting in a Government account somewhere labelled "Beanie's surplus tax contributions for retirement"? Should you reach the average life expectancy of 82. The equivalent of 34 years of today's median salary earner's entire PAYE ($60k salary / $10k PAYE).
If not, then drop the entitlement mentality.
Would be a question that needs to be put to all these grey haired beings at the tops of these various organizations. It's likely the usual "can kicking" for self interest over the last 30 years that has gotten us into this mess
Might be time for the dead wood to start clearing out, and enable some fresh minds to come in and run things properly.
Like the generation that has put down roots at the peak of a several decade long mammoth housing ponzi boom? The historical expenses have been put on the mortgage, literally. We've kept increasing the tab by lowering interest rates, extending the loan term and expecting dual income households.
Well, there is an argument that you didn't actually pay enough tax because what has actually happened is that up until now we've all been living beyond our means (in the sense of planetary means) and while it appeared that you had paid enough you actually didn't. It was borrowed and now has to be paid back.
Maybe the younger generation who have been shafted will decide that the taxes they will pay will be in anticipation that the government will scrap back some money from the wasteful generations that preceeded them and make them pay for the damage they have caused. That's the thing about democracy, over time the people in charge become a smaller and smaller minority.
And my dad died a couple of months after his 69th birthday having been in poor health for the previous 3 years (heart stuff)... That’s not uncommon – according to the Stats NZ life tables 17% of males born in 1951 died before their 65th birthday, and 22% died before their 70th birthday, https://www.stats.govt.nz/assets/Uploads/New-Zealand-cohort-life-tables/New-Zealand-cohort-life-tables-March-2022-update/Download-data/male-complete-cohort-life-tables-1876-2020.xlsx
I think there are serious equity issues with a blanket raising of the age of eligibility. While the overall average life expectancy might be increasing, there are certain groups that are lower than the average e.g. males, poor people, certain ethnicities etc.
I would like to see some flexibility in the system. Maybe keep eligibility at 65 at a lower weekly rate but pay a higher weekly rate if you delay receiving NZ Super until your 70th birthday. That would increase the administration costs of NZ Super but I don’t think it is ok to make people work full time (and pay taxes) for 40+ years until they drop dead just because they are genetically predisposed to a shorter lifespan.
One obvious solution (well, obvious to me) to the problem of some people having to retire earlier than others because of ill-health: turn NZ Superannuation into a citizen's allowance, a UBI, paid to very adult regardless of age. Obviously that would require a transformation of taxation, requiring quite a high flat tax on all other income and on the implied or imputed income and benefits of assets, especially land. But it's doable.
Doable but unlikely. Good to have new ideas to consider. My view -
Pluses
- It would slightly increase the tax take (depending on any changes to social welfare, WFF etc) or at worst hold it level.
- It would incentivise part time work for unemployed due to the removal of taxes under the threshold.
- It would enable more social work to be done as this income would support all people currently not being paid for this
Minuses
- It would be inflationary and we are already in that soup.
- Your idea of adding in a complex asset tax regime might negate most of the admin saving a flat tax is supposed to deliver.
Agree with some flexibility.
But the only stats we care about is what's happening now and going forward. From the link you provide, from 2020 only 5% of people will die pre retirement age. In 2001 it was 7% and in 1981 it was 10% before 65. If we were to move the needle to keep the 5% threshold identical over the next few decades, I think we will end up at a 70yo retirement age in about 30 years given the trend of longer lives. That's my point. And using those stats, given in 1981 a 65yo has 23 years left of life left (on average), vs 26 years in 2020, so you can see the increasing burden. Your father was exceptional, given the stats, likely mine is closer to the mean.
However given that the world has less and less future resources to draw from and is more and more constrained by pollution, somethings got to change. Else we are simply not facing reality.
From the FMA report link:
"...total funds under management reached $81.6 billion, or double the $40.8 billion held in 2017."
"...total funds of $81 billion grew by 31.7%, total fee revenue of $650 million was up 20.7%."
Once the basic provider business infrastructure is in place, there is no additional managed investment workload or significant additional business cost required in managing $1000 or $100000. Therefore the increase in fee costs (because of fees charged as % funds invested) as KS Funds have grown over the years continues to be an industry ripoff rort, a business model feature of managed investment funds globally.
The fund management industry is one of the great con's of our time. There are now however some very good low cost tracker funds/ETF's, the likes of Vanguard etc. Over a lifetime the fee's really accumulate, it's a rort. We need to get Kiwi's out of these expensive schemes and into low cost providers. Australia are very good at naming and shaming poor performing funds.
Don't your quotes point to the fees as a % of FUM are in fact decreasing in line with your expectation? Total FUM is growing faster than fees so ave fees as a % of FUM have decreased from 0.869% to 0.797%. That doesn't actually feel like a significant cost given the average balance is c.$30k so the economies of scale you are talking about haven't really kicked in yet.
A big issue I see in NZ is a lack of financial knowledge and a tendency to follow the masses in making financial decisions. i find this frustrating in a country where there are few impediments (ie taxes and entry costs are low) to investing.
Example of this
1. FOMO in the property market - all age groups and generations do this - paying way too much for property relative to its worth - effectively eroding savings to upgrade their property to keep up with the jonese- unfortunately your house doesnt put food on the table.
2. Using Fixed term loans instead of offset loans to pay down mortgages faster and justifying it by saying I'll save up and pay more off the principal when the term expires. We paid just $180K in interest on a $500K loan using an offset account - 1/3 of what we would have if we used a fixed term loan - our excessmoney worked everyday at reducing our interest costs.
3. Investing in risky investments such as cryptocurrency and "boom" stocks instead of blue chips that pay dividends - because everybody else is doing it and i can get rich quick.
4. Panicking during downturns and selling or moving assets to lower risk assets or funds - locking in losses.
5. Believing that financial markets will never downturn or interest rates will never go up - despite there been a well documented history of EXACTLY this occurring.
6. Not understanding how much you spend vs how much income you make. The amount of under 30 years olds who cant budget and still have 80-90K student loans. Worse still going overseas and allowing interest to accumulate on those 80-90K loans and not paying anything off whilst away.
7. Student loans - young ones who live away from home (whilst parents live in the same city) because they want freedom - meanwhile juggling rent, student loans and living costs and wondering why they have nothing left to save.
8 Not understanding how to create secondary income streams - that actually deliver income (running a rental property at a loss - because everybody else is doing it is not an income stream)
I could go on - but thats the highlights.
I'm not sure you read my response- all of the financial mistakes are committed by all of the generations - only point 6 applies to those born in later years and to be fair student loans have been in place for 30 years now - so apply to everybody under the age of 50. You missed my point that whilst some costs are unavoidable such as tuition, there is a substantial portion of students that allow their "lifestyles" to create a significant portion of their loans. Excusing making poor financial decisions only reinforces my point.
Before you ask for proof i am aware of 2 students currently living in central Wellington (parents live on the kapiti coast) and Central Auckland (parents live in Manukau) paying rent because they want to be close to their friends and party on weekends - at a student loan cost of $25000 a year.
I did, actually. And my point still stands, the headwinds being navigated by people in this day and age, when costs are increasing and wages are not growing at anywhere the same rate makes conventional economics (and judgements for not following them therein) kind of useless.
I have done everything right; lived at home into my 20s, gained a professional qualification and bought a starter home. It still doesn't change the fact that the people in a better position than me dumped Uni for a trade, had kids earlier, bought houses sooner and took on more debt to buy bigger houses instead of a modest starter home like I did. Short story long, doing the thing everyone thinks you should do all the time isn't always a surefire winner, but it is a lot easier to not fall behind when you have wage inflation, lower living costs and the free cash to create alternative income streams for yourself. Perhaps that's not so realistic anymore.
It feels like I say this on just about every article about retirement savings: the Retirement Expenditure guidelines do not say that a single person 'needs' $1,029. Nor do they say that a single person 'needs' $726 a week to live a frugal lifestyle.
These figures are actual levels of expenditure by New Zealanders who have already retired, in the fourth and second quintiles respectively. If you dig down into the details, the 'choices' lifestyle has slightly less than $190 a week spent on all housing costs including energy, leaving $839 a week disposable income after housing and energy costs. That's a shitload of money left. Even the 'frugal' lifestyle person has more than $500 a week left after all housing costs including energy.
Short version: these guidelines don't tell you what you need to spend. They tell you what current retirees have to spend, and current retirees are the most well-off generation in history. There is no point trying to whip up a panic amongst 40-somethings that they are not going to be as well off as their parents are in retirement. For most of them they've never been as well off as their parents were at the same age every step of the way. Why should retirement be any different.
I just want to ask a slightly stupid question. Is that data only for Kiwi Saver accounts that are actively being contributed to or all accounts? I'm thinking there are probably a lot of legacy accounts where someone has a few dollars but went to work abroad so moved to another retirement scheme.
You don't get something for nothing. And that something every person needs. So.
Universal membership, contributions lift to 16% total. No government subsidies but no tax on KS either.
Tough, but you just 'gotta wear it'.
In about 30 years ditch National super entirely.
What's the alternative? Panic when G Robertson runs out of money to borrow?
Plus, is the expectation that I fork over mandatory 8% + Emp 8% (which is really 16% of my own money given it will nuke anyone getting a payrise for a few years anyway) in addition to the current tax burden, a large chunk of which is going towards superannuitants to get money without strings other than being a certain age? Or am I going to get the same support in addition to my Kiwisaver when I retire? If not, it doesn't pass the sniff test.
As a relative new New Zealander (since 2009) my observations are as follows. New Zealanders enjoy life in the here and now and adjust their spending to it. There is less focus on what could happen in the future so saving for it is less of a priority. It is just a choice you make! Only those who paid attention during High School and discovered the power of compounding interest acted accordingly and they are cruising towards a comfortable retirement. Do not punish those who have been acting cleverly with introducing means testing when applying for NZ Super.
From my experience, if you own your own home a pretty decent no frills lifestyle can be had on just the government super rate. I manage to do that, living in Auckland. I am lucky enough to have another source of income and I draw down on that to fund luxuries like travel and splurges.
Lots of this is just the retirement industry alarmism.
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