New research shows 55% of New Zealanders are struggling with their financial situation – up 17% compared with February 2021.
It came against a backdrop of high inflation, which is 6% and has been at that level or higher for seven quarters.
Out of the people surveyed, 51% say they are ‘starting to sink', or are 'treading water’ and a further 3.5% are ‘sinking badly’.
The research was commissioned by Te Ara Ahunga Ora Retirement Commission and was done by a consultancy, The Research Agency (TRA).
It surveyed 4000 people and is an annual project which started in 2021.
The finding revealed that women, Māori and Pacific Peoples were the worst affected.
Te Ara Ahunga Ora's research head Jo Gamble says the impact of this hardship can be serious.
“Financial stress can ripple across a person’s whole life," she says.
It can affect not only their financial wellbeing but how they relate to the friends and family, and the choices they make socially."
“It’s important for New Zealanders to reach out for help if they are struggling," Gamble says.
The research also looked at New Zealander’s financial behaviour in four key areas: budgeting, saving, tackling debt, and retirement. It found some positive trends, such as people focusing on their money management skills, and considering purchases before they buy them.
But it found more than half the population were feeling squeezed financially.
Average annual expenditure for retiree households put at $55,700
Meanwhile, a second piece of research looks at spending patterns by elderly people, and this presented a slightly more optimistic view.
It was done by economic research institute Motu, but was also funded bv Te Ara Ahunga Ora Retirement Commission.
This piece of research was released simultaneously with the TRA survey but was dated from 2018-2019, and was based on Statistics NZ's Household Economic Survey of that time.
The results found the average annual expenditure for retiree households was $55,700. Of this sum, 13% was allocated to groceries, 19% to housing, and 14% to things like utilities, communications, and insurance. Discretionary expenses accounted for over half, 54%.
Broken down further, retired couples spent an average of $65,100 per annum, but single retirees spent $30,700 annually. That works out at $1252 and $590 per week respectively, far in excess of the maximum NZ Superannuation rates of $632 and $411 respectively.
By cutting out all discretionary spending, retirees could have got by at a pinch, but even modest discretionary spending would have needed a top up. This squares with research by Massey University that says the pension does not meet the costs of most retirees and in some cases does not come close.
The research also confirms that retirees with higher qualifications, who own their homes, enjoy greater incomes, live with their partners, and have no dependent children tend to experience higher subjective well-being levels.
Those with lower subjective well-being are rent-paying retirees, single retirees living with others, and Māori households.
It also shows that as retiree households advance in age, their spending patterns exhibit significant downward shifts, particularly in discretionary expenditure categories such as clothing, transport, and recreation and culture.
21 Comments
I thought retirees would have been doing better than this given the tailwinds they have had the past 3-4 decades (i.e. ability get mortgage free while interest rates were falling - after buying a house at 3-4x incomes, then start saving 10 + years ago and have a nice nest egg built up + superannuation).
If we gross that up to say, a $65,000 annual household income, the affordable weekly rent if using 30% of gross income is $375.00 per week.
https://calculate.co.nz/rent-affordability-calculator.php
And, as I understand it - the percentage of those entering retirement with their own mortgage-free home is declining rapidly.
It amazes me that no political party seems to be addressing this looming catastrophe with both the stats (to inform the wider population) and subsequently the policies to prepare/address it.
.
I don't know. Many are probably just as frivolous as they claim millennials to be. They rushed out to buy a house at a young age with 3 mortgages at ridiculous interest rates. Many probably lost a lot by gambling on the share market in the 80's.
Also, ever since the scrapping of compulsory super contributions by Muldoon there's been this entitlement mentality that the taxpayer should fund people's retirement lifestyles. There's never been much incentive for people to build up a nest egg.
Who is "they claim"? Most retirees I know claim nothing of the sort. They pity the next generation, and most help their kids substantially. However, they do think the younger generation need to see through the empty promises of virtue signaling politicians they elect. They show their true selves in where they put other peoples money.
Possibly because the media messages, and paradigms by many people tends to focus on the very few who are very well off, and this tend to then lead people to believe that they are indicative of everyone. Even on this site opinions tend to be that 'Boomers' are unreasonably well off, and unworthy of their pensions. Blinkered people usually do not like having to lose their blinkers and see reality.
But the reality is that for all age groups, since 1984 at least, successive governments have systemically betrayed the people of NZ, favouring the wealthy and privileged through economic policies. In the late 80's i'd be inclined to forgive the governments somewhat as they simply did not really understand, or try to research the projected forward impacts of their policies. Chris Trotter even identified that Mike Moore indicated to the Lange Labour government leadership those who they couldn't afford to piss off - those rich and powerful groups. But as the evidence become more obvious, those governments became wilfully blind, and even happy that the people of NZ were becoming poorer. During all this they made damn sure their privileges and income were not impacted, and even enhanced.
So this outcome will just be the surface of the iceberg, and other effects are there too such as housing, and living standards.....
Agree with you wholeheartedly Murray. The betrayal of the people started after 1984 by a Labour government and continues to this day. The mass unemployment of the eighties led to immediate social upheaval to the extent it was ‘every man for himself’. We got hijacked as a nation by the rich and powerful both here and globally. It was heartbreaking at the time to witness and now we see so many financially stressed people and families. Where trying to pay the rent is a struggle and buying a home is impossible for most.
The Labour Govt and Roger Douglas were elected to sort the mess out Muldoon created, and they did. Muldoon lived in a fantasy world of 66% tax rates, imagining that he knew better than everyone else. He was arrogant beyond belief, quite a statement when it comes to politicians. I used to go to work and wonder why I was there, working 2/3 of the time for the govt and 1/3 for myself. Muldoon's lunacy set me on a path to financial independence which made me a lot of money.
Kiwis left NZ in droves, encouraged by the Premier of Queensland, no death taxes there.
We needed up to 20%+ mortgage rates to solve the problem. Yes, people lost their houses and their farms, but Douglas got on top of it all and set NZ on a new path, which is currently being reversed by this government.
NZ lived in a fantasy world where the government controlled everything - buses, telephones, road transport, the airlines, the banks, the exchange rate, even how much money you could send or take overseas. If you wanted a new car you needed overseas funds. I was a pilot flying offshore several times a month and if I needed more than $10/day expenses I had to sign a form to access the funds from the bank.
We were a mini East Germany, the only thing missing was the Stasi.
The difference between spending and income is either wages or investment income, or diss-saving. The retirees I know all fall into one of the two groups. Those who deferred gratification and invested in their working careers, continue to do so in retirement, so will cope with potentially 30 years of no income. Those who didn't are running through their savings on their 60s and early 70s, and will be fine if they don't live too long. Their get out of jail card in their late 70s is sell the house for a retirement village, or a reverse mortgage. The real issue is a generation who don't get a house paid off by retirement, and /or build earning assets in their 30s and 40s. Earning assets such as shares can be as good as buying a house at long term earnings of 9-10%, so the big issues are deferred gratification and compounding. Comments here seem to all be about what someone else (government, which is really other taxpayers) should do, whereas it's really about what people need to do for themselves.
That's not dealing with the fact that we have the most financially irresponsible government we have ever elected, including that of Muldoon. At least he blew our money on real assets.
Many retirees will be financially propping up their children's families - e.g paying for schooling, child care costs, after-school activities etc
I know of a several families where the grandparents are paying for their kids private school education, even when the parents are high income earners with a home
“Broken down further, retired couples spent an average of $65,100 per annum, but single retirees spent $30,700 annually. That works out at $1252 and $590 per week respectively, far in excess of the maximum NZ Superannuation rates of $632 and $411 respectively.”
Boo f**ken hoo. They have savings or they can sell something. Reverse mortgage your house.
The generations have had it far far sweeter than my kids will so I really don’t give a shit.
If there we 10 people in Kiwisaver, amazingly 6 didn’t contribute anything so missed out on the 3% employer contribution and the government $521. The average balance was only $27,379 and even those approaching retirement only had an average balance of $53,579
I might have missed something but apart from Journalist Rob Stock I haven’t heard any media or politicians look to improve our dire stats. Australia has compulsory super which started in the 90s with the employer contributing to ALL. It started off at 3% which has now increased to 11% of wages or salary. Hopefully someone will pick up a reality check of NZ retirement savings and look to change our settings
- KiwiSaver accounted for 3,168,641, as many as 1,862,000 didn’t contribute at all in the year to 31 March 2022
https://sharenz.com/2022-kiwisaver-report-are-people-making-the-most-of-the-scheme/
The average KiwiSaver balance as at 31 December 2022 was $27,379
Made worse by the relative tax treatements of each scheme by each country. NZ continues its short-sighted ticket-clipping approach for the sake of shoring up the government books, while at the same time depriving Kiwis of the benefits of compounded returns of the tax portion of their savings over an entire working career.
Compulsory savings schemes are a good idea for those who aren't disciplined enough to save and invest.
Ultimately though, I think people should be taught to just rely on saving and investing themselves instead.
I am a self employed immigrant who came to NZ in the 90s with nothing, never ever made any KiwiSaver or Superannuation payments, had no employer contributions paid towards my retirement, just worked hard, invested, saved, lost some/won some, but in the end should be able to retire in my 50s, without any KiwiSaver.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.