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NZers Unprepared And Unrealistic About Retirement Healthcare

News release
18th December 2012

New Zealanders Unprepared And Unrealistic About Retirement Healthcare Costs

• 79% of New Zealanders think they will have to pay for some of their elective healthcare in retirement.
• Yet just one in five have started saving.
• Many think that savings of less than $10,000 will be sufficient.
A new survey of over 2000 New Zealanders by Southern Cross Healthcare Group has found that only a quarter believe they have any understanding of how much they need to save for their healthcare costs in retirement – and of those people, many are vastly underestimating what they may actually need to cover potential costs.

The median amount people expected to need in current value over their retirement was $20,000. However, 35% believed they would need $10,000 or less.

Southern Cross Healthcare Group CEO Ian McPherson said the results showed a significant amount of education and support was needed if New Zealand’s future retirees were to be able to access the healthcare they wanted.

“As the population ages, it is highly unlikely the Government is going to be able to continue providing the level of non-urgent healthcare services it does today. The reality is $10,000 won’t get you very far over a 15 year retirement – especially as medical inflation has historically risen much faster than CPI. Today a single hip replacement can cost upwards of $18,000 and even a smaller, and very common, procedure such as a single cataract removal generally costs in excess of $3500.”

The survey found that younger people were the most confident, yet were the least realistic about future healthcare costs in retirement. 36% of those aged under 30 thought they could pinpoint how much they would need. Yet of those, 41% believed $10,000 or less would be sufficient.

Of those aged 50 plus, only 16% thought they knew how much they would need to save. Of those, 33% believed it would be $10,000 or less.

Additional findings from the survey included:
• 11% don’t expect the Government to be funding any healthcare at all in retirement – rising to 15% of those aged under 30.
• 21% expect the Government to fund all of their healthcare services in retirement.
• 47% expect to use personal savings and 35% expect to use their health insurance to cover some of their healthcare costs in retirement.
• Of publicly-provided services, 82% expected emergency surgery to be provided but less than half expected elective surgery to be provided in their retirement.
• Only 27% of those aged 50 plus have started saving for healthcare costs in retirement.
McPherson said provision for healthcare needed to become an integral part of New Zealanders’ retirement savings plans.

“A previous generation believed the state would provide for their old age. Today, it’s very clear that this will not be the case, and we are being incentivised and encouraged to save for our retirement. The same clearly needs to be done for our future healthcare costs. What we also need to focus on is ensuring New Zealanders get the best possible value for their health dollar.”

New Zealanders’ attitudes towards retirement healthcare costs

Age
All people surveyedUnder 3030 to 3940 to 4950 plus
Planning to rely solely on free Government-funded healthcare in retirement21%8%16%22%32%
Expect to cover some of their healthcare costs in retirement79%92%84%78%68%
Have started saving for their healthcare costs in retirement20%13%19%19%27%
Believe they have an idea of how much to save for retirement healthcare costs25%36%32%21%16%
The amount of retirement healthcare savings people think they will require:
Median $20,000$20,000$30,000$25,000$20,000
Over $100,0005%9%18%15%3%
$50,001 - $100,00016%17%14%15%15%
$20,001 - $50,00025%23%27%25%21%
$10,001 - $20,00019%11%19%16%28%
$10,000 and under35%41%23%28%33%
Methods of covering cost of healthcare when retired:
Personal savings47%53%49%42%44%
Health insurance35%50%41%32%24%
Free Government-funded services69%61%64%70%77%
Family14%22%15%15%7%
Another method1%1%1%1%2%
Not sure14%18%17%16%8%
Expect the Government to cover the cost of the following health care services in retirement:
Drug prescriptions66%60%59%67%72%
Minor elective surgery41%30%37%40%51%
Major elective surgery48%39%43%50%55%
Emergency surgery82%77%77%85%86%
None of the above11%15%15%9%7%

ENDS

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