The cost of living is putting pressure on when New Zealanders can afford to retire. Photo / 123RF
The cost of living is putting pressure on when New Zealanders can afford to retire. Photo / 123RF
Economic uncertainty and rising costs could result in almost two-thirds of New Zealand workers delaying their retirement, a new survey suggests.
The findings were part of global recruitment and HR company Randstad’s latest Workmonitor Employment Research, which surveyed 1000 New Zealand workers.
According to the report, one-fifth (20.7 per cent)of baby boomers (born between 1946 and 1964) plan to delay their retirement due to their financial position.
And four out of five employees (79 per cent) said they think their financial position is preventing them from retiring as early as they would like.
Only 34.5 per cent of those surveyed said they are confident of retiring before 65, compared to more than half of workers (50.6 per cent) globally.
Ian Scott, general manager of talent solutions at Randstad NZ, said they were seeing a longer-term trend growing towards “unretirement”.
“The move towards ‘unretirement’ is one of the most marked swings in sentiment we’ve seen this year,” he said.
“Findings show that almost two-thirds of New Zealanders are planning to work past the current retirement age of 65 to improve their financial position.”
Commenting on the numbers, Retirement Commissioner Jane Wrightson said: “While it’s not surprising to hear people are saying they are delaying retiring due to their financial position, it is concerning to see the percentage so high across the population.
“As part of our 2022 review of retirement income policies research we have seen growing numbers of people who have not saved enough for their retirement, are still paying off mortgages or renting,” she said.
“These people are heavily reliant on NZ Superannuation as a result which makes it a real challenge for people to make ends meet if they have to rely on the pension alone.”
Wrightson said one reason Kiwis might feel less confident about their ability to retire at 65 compared to those globally is that New Zealanders generally have lower savings compared to other OECD countries.
“KiwiSaver has only been around for the past 16 years and balances are lagging behind where we’d expected them to be at this point.”
She said 40 per cent of KiwiSaver members have a balance of less than $10,000.
“Housing could also be a factor, with home ownership becoming out of reach for more people,” Wrightson added.
“Long term, the balance of home ownership is expected to shift to 60 per cent homeowners and 40 per cent paying rent, which by 2048 will equate to up to 600,000 people.
“Our data is showing that superannuitants still paying rent are much more likely to spend 40 per cent or more of the NZ Super income on housing.”
Retirement Commissioner Jane Wrightson. Photo / Michael Craig
Wrightson said she was most concerned by the increasing numbers who will have high housing costs – either rent or mortgage – while living on the pension.
“Some people are very happy to work beyond pension age; others want or need to top up savings as much as they can before they stop work; others can’t easily work past 65 at all,” she said.
“We want New Zealanders to be able to live with the dignity and mana they deserve in retirement, whatever view they have of it, and enjoy a high level of belonging and connection to their whanau, community, and country.”
She said Retirement Commission research shows that the age of eligibility of NZ Super should remain the same.
“If we don’t do this, we will need special policy considerations for those who will be affected the most – women, Māori, Pacific people, and those with physically demanding jobs.”
Massey University’s annual New Zealand Retirement Expenditure Guidelines report last year calculated the lump sum required at retirement to fund the additional spending over NZ Superannuation.
It found a two-person household in a metro area would need $191,000 for a “no frills” lifestyle and $755,000 for “choices”. Living provincially, those numbers fell to $77,000 for no frills and $480,000 for choices.
A one-person household in a metro area would need $277,000 for a no-frills lifestyle and $561,000 for choices.
The report noted that inflation – at a 30-year high of 7.3 per cent at the time of publication – was a new factor those planning for retirement needed to consider.
Inflation remains around 7.2 per cent - as of the December 2022 quarter.
Meanwhile, Randstad NZ’s Scott said businesses should be making plans now to support the growing number of older members of their workforce.
“With many employers already contending with an ageing workforce, this has clear implications for the future of work. It is also a sharp reversal of the talent shortages that were triggered in part by workers choosing early retirement during the pandemic.”
But there is a silver lining in using a maturing workforce to address the talent gap, Scott said.
“As New Zealand’s working population gets older they also get wiser. Employers should be thinking about how to use this knowledge to their advantage.
“For example, making use of the skills and invaluable experience of the older staff to mentor younger workers, thereby softening the impact of, and even delaying their exit from the business.”
