Fears over financial security in retirement
New Zealanders voice fears over financial security in retirement
A sobering picture of the worries felt by New Zealanders about retirement has been revealed in a new survey.
The snapshot poll was carried out by the Commission for Financial Capability and found 86% were apprehensive about their financial security when they reach 65, with a quarter feeling very concerned. More than half expected their standard of living to drop in retirement.
More than 1,300 people completed the survey and hundreds of those were interested enough to add extra comments. Nearly two thirds were aged 50-64, but they also included people who are already retired and said their savings were running out faster than expected because the cost of living was higher than they had realised.
Many said they had simply not saved enough for retirement and often the only solution was to work longer. Others who haven’t yet retired were unsure how they would cope.
Comments included: “I am renting. My rent costs me half my wages. It is a struggle to exist now, and I am working 30 hours a week in the school term. I will be even worse off with the pension. I will need to find a cheaper rental, which I have already tried to find. How will I afford to eat? Live? It is hard enough now, and I live alone.”
asked to select factors that would affect their financial
security and could choose more than one answer. Nearly 20%
identified difficulties saving, a similar number had no
retirement savings or investments, and 14 per cent said they
would be renting long-term.
Concerns were also raised about job security, health and disability problems, and being socially isolated.
The survey is one of a series that is being run on the Commission’s website and is being released during Money Week to show the week has a more serious side too. The surveys will remain open until the end of next month and the responses will feed into the 2016 Review of Retirement Income Policies.
Retirement Commissioner Diane Maxwell said: “As we live longer, the financial pressures in retirement increase – we’ve got to live on a fixed income for a lot longer than our grandparents did.
“The good thing is that people are starting to think about it and many are making plans to manage their later years. But I’m concerned for the people who aren’t or who are unable to. Our review will consider what can be done to support those people.”
When asked what they would do to help themselves, nearly half said they would spend less and a third would save more, while a quarter thought they would move to a cheaper place.
Renters, particularly in Auckland, didn’t see any hope of buying and said they could not save at the same time as paying rent.
Not all of those who completed the survey were concerned. Those whose future looked secure were characterised as having their own home mortgage-free, secure employment and savings or other investments, and family support.
One person said: “I saved for my retirement from 35 years of age. I exercise, eat healthy food, and continue to cut costs at every opportunity. I walk or use public transport. I am considering registering as an Airbnb or taking in a Mon-Fri boarder.”
Another said: “We have modest superannuation… no mortgage and know that we will still have little to spare once we have dealt with rates, health, insurance, household and car insurance, food escalating power costs and basic household maintenance. We don’t smoke, we don’t drink, we don’t gamble and we don’t take holidays.... We know we are better off than many but retirement is not going to be in any way pleasant.”
Many of those who identified with being vulnerable were renting or had large mortgages, other debts, no savings and frequently they or their partners had health issues.
Being single was also an issue: “I’m in my fifties. I have KiwiSaver. I can’t afford to put a higher rate in my fund as I have a mortgage. It does concern me. I won’t have anyone to rely on.”
A commonly identified barrier to saving was the need to support children, including adult offspring who were unemployed, had health issues or financial challenges.
When asked what would improve their financial security, the most common suggestion was the need for free financial advice, planning and information. Many people also said financial education should be taught in all schools from a young age.
Other suggestions included a higher rate of NZ Super, the need for assurance around the future of Super, and compulsory KiwiSaver. Some people also said lower health costs and having good health were important.