Hawke's Bay Today

Shortfall grows for NZ pensioners

Older Kiwis are having to spend more than they get on Superannua­tion to get by . . . and the gap is widening

- Tamsyn Parker

The shortfall between how much Kiwi pensioners are spending and what they get from the state is increasing, putting more pressure on people to find the money elsewhere.

Massey University’s Westpac FinEd Centre has updated its annual Retirement Expenditur­e Guidelines and it shows transport and health costs have pushed up the cost of living for retirees.

They show a single person living in a major city like Auckland, Wellington or Christchur­ch, on average, spent $590.44 a week for the year to June 30, 2017 to live a “no frills” life. That was $200 more than the $390.20 after tax rate an over 65-year-old received in New Zealand Superannua­tion. While a couple living a “no frills” life in a major city spent $872.22 a week — $272 more than the $600.30 paid by to them by the Government after tax. The shortfall for those living in provincial areas was lower — but not by much. Singles living in a provincial area spent $561.04 on a no frills budget — nearly $171 over what they were paid by the Government, while couples in provincial areas spent on average $621.48.

The research found there was no group — either those living single, or as a couple, or those living in the town or the city — that lived off New Zealand Super on its own.

That was a change from the 2016 data when the research showed a couple living a no frills existence could live off NZ Super and have $65 spare a week. Singles living provincial­ly had a shortfall of $36.23 in 2016.

Claire Matthews, author of the research and director of academic programmes at Massey University, said the shortfall had at least doubled for most households.

“But, to some extent, this reflects households being better prepared for retirement, allowing them to top up their superannua­tion payments to give them the lifestyle they want.”

Transport was a big driver of spending increases while health care spending also rose. Those who lived on a “choices” budget also spent more on recreation.

The report also looked at the household income of people over 65 and where their money came from using data from Statistics New Zealand’s Household Economic Survey.

It found nearly half those who are spending an amount which gives them “choices” like buying a bottle of wine and eating out regularly were still working either part or fulltime. Matthews said the research was helpful for people wanting to know how much to save to fill the gap between NZ Super and how much they wanted to spend in retirement. “Looking at the gap is most useful because spending patterns are going to change.” The research found the shortfalls could be closed by people having a lump sum of $21,00-$783,000, depending on where they lived and the lifestyle they wanted. “To have flexibilit­y and choice around employment in their retirement years, New Zealanders need to save during their working years to provide an income from investment to supplement NZ Superannua­tion, to fund their desired lifestyle.”

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