New Zealand Statistics

In New Zealand today, over half of the 605,000 people who are aged 60+ live in homes which are mortgage-free. Many of these people have also entered retirement believing that they would be comfortable, through their own savings and government support. However, continuing increases in unavoidable costs (rates, telephone, power and food); reduced earnings on investments; and government policy changes have diminished their sense of security.

In a Living Standards survey of older New Zealanders (see www.msd.govt.nz), just over half the members of the age groups 65-74, 75-84 and 85 plus, said that they just ‘broke even’ with no discretionary expenditure and thus were unable to save. 13 percent had to borrow or draw down on savings most months. Commonly, income amongst older people is low which makes them ‘asset rich and income poor’.

Many people underestimate their life expectancy. By 2051 life expectancy at age 65 is expected to be a further 20.3 years for men and 23.5 years for women, meaning that they would, on average, live to 85 and 88 years respectively. Increased numbers of superannuitants will require increased Government support.

There is evidence that attitudes towards inheritance are changing. Greater longevity is increasing the possibility that assets will be required to sustain living standards in old age.

The median income for people aged 65 and over at the 2001 Census was $13,100. People aged 65 and over now remain in employment longer, making up 3 percent of total employment in 2001, compared with 1 percent in 1986. Parents often see their children as better placed financially and therefore are more willing to put their own comfort in old age ahead of the desire or requirement to make bequests. Linked to this is a keen desire for independence and not to become a burden.

Older people are often reluctant to take on debt after discharging their mortgages. Attitudinal barriers are significant. Many older people are risk and debt averse.

There is considerable evidence that most older people prefer to remain in their family homes and in familiar community surroundings.

Many older people have a strong feeling that they need to preserve their assets for some emergency in the future. The contemplation of future health problems often motivates this attitude, which is also linked with the ‘last resort’ thesis and views on inheritance. Others accept that their ‘rainy day’ has come or that there is something to be said for enhancing standards of living while you are alive.

Previous research also tells us that most people tend to use any additional funds acquired for everyday living first, followed in order by, healthcare, travel (particularly to reunify families), car maintenance, chattel replacement, household maintenance and finally recreation.