Housing costs are making retirement difficult for many Kiwis!

Housing costs cutting into retirement income for many Kiwis!

A recent report has revealed that many older Kiwis are using large amounts of their retirement funds to cover housing costs! 

A staggering number of retirees are still having to shell out lots of money to cover mortgage or rent. This means less money for Kiwis to get through retirement during a time where things are already tight. At the moment, many Kiwis are already struggling to make ends meet with rising inflation, and that’s with a full-time job. Imagine trying to do the same without your income! 

Read on to find out about the difficulties facing many retirees AND how you can avoid these stressful situations! 

What’s the report all about? 

Every three years, the Te Ara Ahunga Ora Retirement Commission must create a report called the Review of Retirement Income Policies (RRIP) which examines various topics about retirement. 

One of these topics is housing for elderly Kiwis. To gather information for this section, the Commission asked The Treasury to analyse the Household Economic Survey (HES) to better understand the housing costs for those over 65 and whether NZ Superannuation is adequate for retirees with mortgages or who are renting. 

The results were incredibly illuminating as they show the growing challenges older Kiwis face when relying on NZ Superannuation to cover housing costs. 

Challenges facing mortgage or renting retirees

The report highlighted that retirees who are renting will likely be spending 40% or more of their $463 (per week) NZ Superannuation income on housing costs. The findings also show that renting will become more common for elderly Kiwis in the future, with trends suggesting that there will be a 100% increase in older Kiwis renting. 

The situation is even worse for retirees who have mortgages. For these Kiwis, more than half of them spend 80% of their NZ Superannuation on mortgage repayments. The majority of these retirees (80%) spend at least 40% of their NZ Superannuation on housing costs, a significant chunk out of their weekly superannuation income. 

Homeowners have it much easier

For retirees who own their houses without a mortgage, the situation is much better. The majority of them only spend a small amount of their NZ Superannuation on housing costs.  

“... approximately 80% [are] spending less than 40% of NZ Super on housing costs. More than 50% spend less than 20% of NZ Super on housing costs,” said Dr Suzy Morrissey (Te Ara Ahunga Ora Director Policy).

So for those Kiwis who own their homes outright, they’re able to keep most of their NZ Superannuation for other living costs. It’s a lucky place to find yourself but many Kiwis aren’t so fortunate. 

Decreasing homeownership for retirees

The report highlights the changes over the last few decades for Kiwis in retirement. 

Retirement in Aotearoa over the decades:

  • 1986: Majority of elderly Kiwis (87%) owned their homes outright with no mortgages, and were not engaged in paid work. 
  • 2018: Majority of older Kiwis (80%) owned their homes but 20% were paying off a mortgage and 20% were renting. 
  • Future: Based on various projections, there will be a shift to 60% of Kiwis owning homes vs. 40% renting. 
  • 2048: 600,000 retired Kiwis will be renting. 

As more retirees start renting or having to pay off mortgages, NZ Superannuation further struggles to cover all retirement costs.

You need to think about retirement now! 

This report reveals how important it is for everyone to start thinking early about how they’ll cover all the costs of retirement. 

“It’s a real challenge for people to make ends meet if they are having to use substantial amounts of their NZ Super to cover housing costs,” says Dr. Morrissey. 

Dr. Morrissey adds that NZ Superannuation was designed with the idea that all retirees would be homeowners but that’s far from the case for many people. 

Since NZ Superannuation continues to struggle to adequately support Kiwis heading into retirement, it’s important to think about how you will afford all your living costs once you hit 65.

Use National Capital!

If you need help figuring out how to prepare for retirement, then you should chat to a financial advisor. 

Luckily for you, we know exactly who you should talk to… National Capital!

Our friends over at National Capital are independent financial advisors that’ll give you great advice on your retirement funds and KiwiSaver! They’ll help relieve your financial worries, allow you to make informed choices, and give you confidence in your investments. 

To start, use their FREE online tool Kiwisaver HealthCheck! It collects some of your information to provide you with tailored advice on which Kiwisaver fund is best for your needs! 

Head to Money Compare! 

Since you’re already reviewing your retirement funds, why not check out and compare all your other financial plans too!

The best way to do this is by using Money Compare!

At Money Compare, you can compare all your financial plans! This includes your home loan, car insurance, personal loans and much more.

You’ll save heaps of money and find the perfect plan that meets your needs! 

All you have to do is: Jump on our website, enter in a few details, select filters that match your preferences and hit enter! Then you’ll see all the plans available to you. You can compare them all side-by-side on one page. 

It couldn’t be simpler! 


For more information on the best ways to prepare for retirement, check this out

*This is an educational guide only. It is in no means specific financial advice. Please consult a professional financial advisor (like the ones at National Capital) for any specific financial advice you may require.*

Friday, 28 October 2022