Recent research by the Retirement Commission has revealed that times are getting tougher for many retirees, highlighting how important it is to have strong financial plans in place for your post-work life.

The research by Te Ara Ahunga Ora Retirement Commission involved over 1450 New Zealanders aged 65 and over.

It found that even having a mortgage-free house to live in was not enough to make life financially comfortable for many retirees. Having other investments, including KiwiSaver, was important, too.

More than a third of respondents said their financial situation had become worse over the last two years. The increasing cost of living meant almost half had to reduce their social interactions or other activities that were important to them, and 28 percent bought less food.

With just over a quarter of respondents saying they were putting off medical treatment.

Research lead Jo Gamble said it highlighted how tough things had become for some retirees, and the difficult situation some were in if they were not living in a mortgage-free home, or did not have additional sources of income to rely on.

Just over 40 percent of the people who had mortgages said they did not have any investments, savings or KiwiSaver.

“We can see that those who are renting, or who have experienced life shocks after 50, or have disabilities or long-term health conditions are finding things the toughest. These groups typically have fewer financial assets and are therefore less likely to be financially resilient,” Gamble said. 

Six percent said their situation had changed because of life shocks such as health problems, business issues or being made redundant.

“The findings illustrate the significant financial buffer being mortgage-free provides compared to those renting. In addition, people with investments and/or KiwiSaver were nearly twice as likely to feel their financial situation was comfortable compared to those without.”   

Retirement Commissioner Jane Wrightson says it highlighted the problems with the assumption that people over 65 could live in “relative comfort” on NZ Super alone, even if they had a mortgage free house.

What does it mean for those approaching retirement?

The data shows the importance of having a clear financial plan – both for how you would be tracking to reach retirement if everything happens as you expect, and how you might cope with an unexpected shock.

People with investments and/or KiwiSaver were 1.6 times more likely to report feeling financially comfortable or very comfortable, compared to those without. Being mortgage free was also an important part of the picture.

A comprehensive financial plan can help you to set the goals, to enable you to structure your investments to support your retirement, and tick off other targets such as paying off your home loan.

Having an adviser to help you determine that plan and help you stay on track – whatever happens – can make a big difference.

We can help

At SHARE, we can help you work out determine what is important to you, what your financial goals are, and what you might need to do to get there.

Our team of expert advisers can answer any questions you may have about financial planning, whether that’s for retirement or more near-term outcomes.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.