Pensioners living well on NZ Super alone
Forget requiring millions to retire. A freehold house and NZ Super are all you need, Rob Stock discovers.
Wellington resident Dennis Thompson cracks a smile when he reads articles about how nobody could live a decent lifestyle on New Zealand Superannuation alone.
He and his wife live on nothing but NZ Super, and he says, they save around $1000 a month from it.
‘‘As a retired person, when I read articles in the media regarding how much money is required when one retires, I smile to myself and relate it to fortune telling,’’ he says.
‘‘Myself, 75, and my wife, 74, draw NZ Super as our only income. We save $1000 from our NZ Super each month and hold that in our cheque account.’’
It acts as a ‘‘float’’ and emergency fund for big expenses like replacing an appliance, home maintenance or (Thompson is a practical man) a funeral.
The float fluctuates around the
$40,000 mark.
The NZ Super rate for a married couple relying on NZ Super alone is $600.30 after tax a week, or $31,215.60 a year.
Thompson wants people to know about his life to dispel myths around the impossible sums people are advised to save by age
65 (or whatever age NZ Super is available in the future), spread a bit of hope, and to share his recipe for a happy, healthy retirement.
Many of the features of his life are old-school home economics, but the foundation is the freehold house.
The 2017
report by Bryan Perry makes it clear that arriving at retirement with a mortgage-free home is the basis of a dignified retirement.
‘‘We live in Papara¯ ngi, Wellington, in an 18-year-old freehold house,’’ Thompson says.
Having a home in a retirementfriendly area is also an important part of prepping for the silver years.
‘‘We have a half-hour bus service to either Johnsonville or the CBD. Supermarket and doctor are a five-minute walk away in Newlands. We run a small car and generally travel to Petone or Wellington coast to walk on the flat one or two times a week.’’
Keeping weight off, and staying healthy are essential ingredients in staying happy in retirement on budget, as without medical insurance, which is too expensive for most retirees, medical treatment is entirely on the state system.
Having a low-maintenance home is sensible, as is building your do-ityourself skills during your working years.
Thompson doesn’t lack in DIY aptitude after making his career at Victoria University building research equipment for scientists.
He’s also a skilled gardener, having grown veges since he was eight years old.
His garden contains raised beds he built himself, and espaliered apple trees (‘‘trained’’ to grow on a flat surface) along the sunny sections of the fence.
‘‘We live out of the vege garden year around and rarely eat out,’’ he says.
In his most recent shop, the only fruit and veges he bought were bananas, he says.
As cities grow denser, gardens are vanishing, or shrinking. ‘‘Our lifestyle is fairly basic but we enjoy our garden and our younger family all live in Wellington.’’
Policy failure by successive governments, and the city councils of Wellington and Auckland, also means the prices young people have to pay for homes have risen astronomically.
Most older New Zealanders suffering high material hardship are renters at the mercy of landlords, and do not have home equity free to buy a place in a retirement village.
Perry notes the threat posed by high house prices. ‘‘Declining mortgage-free home ownership for the cohorts coming through to ‘retirement’ suggest that the low poverty and hardship rates may soon start to rise, unless this impact is mitigated by asset accumulation over the life course by means other than home ownership,’’ he says, including KiwiSaver.
Thompson believes super savings schemes like KiwiSaver should take a back seat to paying off the mortgage.
It’s important to remember that KiwiSaver is often used by people to buy their first home, and employer and government contributions make it an important part of lifetime wealth accumulation.
Once the mortgage is gone, people can then go hard on saving, providing they are able to live frugal lives, Thompson says.
‘‘We budget as we always have during our 52 years of marriage, and any spending involves a great deal of discussion.’’
He attributes his frugality to his mother, who taught him to budget by putting his pay into different envelopes in an old ice-cream tub, with an envelope for each expense. ‘‘I still have that ice-cream tub,’’ he says.
The household’s income has never been huge. Thompson’s wife only started to work in a childcare centre when he was made redundant late in his working life.
It took him several years to find a new, lower-paying job in a garden centre. Older workers face discrimination at work, and can find it hard to get work later in life, if made redundant.
People also must learn not to derive their happiness from consumer lifestyles, Thompson believes, and not get sucked into signing up for expensive subscription services, like pay TV.
‘‘If one goes into retirement and needs to sit over a coffee and muffin every day, and buzz off to Surfers a couple of times a year, then they will need to look at a big starter of cash to retire on,’’ Thompson says.
‘‘As l said it’s all about what
"We save $1000 from our NZ Super each month and hold that in our cheque account." Dennis Thompson
you want to do after 65. We enjoy retirement and our lifestyle and regard every day as a Saturday.’’
Official statistics indicate that though many retirees are not flush with cash, they are living lives they consider as satisfying as Thompson’s.
‘‘The great majority of those aged 65 plus are very dependent on NZ Super for their survival,’’ says Perry. ‘‘40 per cent of singles have virtually no other income source, and 60 per cent report less than $100 per week from nongovernment sources, and 75 per cent have more than half their income from NZ Super.’’
And yet: ‘‘On self-assessed satisfaction with life, 87 per cent say they are satisfied or very satisfied, compared with 82 per cent for the whole population.’’
The last point Thompson wants people to remember is that living on NZ Super alone does not mean living on NZ Super alone.
‘‘The rates rebate with the council – we received $620 off last year, although any income above NZ Super can kill it. The Super Gold Card saves here and there; 10 per cent can make a difference on some purchases.’’