Right now, those collecting New Zealand Super comprise 14 percent of all Kiwis, but at the highest projections they'll make up 25 percent of the population by 2041 and 32 percent by 2068.
What's not so clear is whether those of us now in early to mid-life are fully aware of what awaits us in New Zealand's retirement villages and aged-care facilities.
What will New Zealanders be demanding in decades to come? Is the sector set up to meet those demands? How do our services stack up by global standards? And what do Kiwis need to know when shopping around for retirement housing for themselves or loved ones?
Based on my two decades in the sector and work with many retirement village developers and operators, I can offer some insights:
1. The concept of 'retirement age' is becoming outdated.
Whether New Zealand Super can be maintained in its current form as the 65+ population explodes is a question for economists and policy planners, but what is certain is that as we live longer and age better, hanging up the work boots at age 65 will become rare.
Some people will work longer out of financial necessity, and others will remain in some form of employment out of sheer desire and interest.
For those developing, building and investing in the retirement village sector, this means today's desirable amenities will be enhanced with superior IT services, home offices and other work-friendly provisions.
The retirement village industry doesn't want to look like God's waiting room, and operators are highly competitive - they want to ensure that their amenities stack up against the best available, and that residents can easily move up the service scale within villages as they age and need more help.
2. The industry will now help you 'age in place'.
Once upon a time, retirement villages and aged-care facilities, which can include hospitals for highly dependent residents, were separate, and retirement villages promoted the concept of 'resort-style living' to people in their 50s and older. (Little was said in the brochures about what would happen once you could no longer live independently.)
People would move out of the family home and into a village, and often make two or three more moves as their needs increased.
This is a troublesome model for several reasons, and the developments being designed and built today are very different: independent apartments, serviced apartments and hospital facilities are all on the same site, which ensures a continuum of care for residents as they age. This is ideal for operators, who have longevity in the client base, and residents, for whom disruption is minimized as they age.
Moreover, the economics of the retirement village model (for investors, operators and residents alike) is most successful when individuals enter the village at a stage of life when living with complete independence is no longer possible.
The operators are focused on long-term capital gains, and make money not through service fees but through the sale and purchase of property within villages. For residents, the combination of stability and consistent, needs-based care is hard to beat.
3. The New Zealand sector is a world leader.
The retirement housing sector is one instance in which the stars have aligned and policymakers and industry leaders have collectively got it right.
The Retirement Villages Act 2003, which governs registered villages in the sector, is a sound and effective piece of legislation. The proof is in the pudding, with a McCrindle Research survey finding that the satisfaction of New Zealand retirement village dwellers is twice that of their Australian counterparts.
In general, our industry compares favourably with the rest of the world; for example, the UK market is only beginning to discover and replicate some of the features exemplified in New Zealand.
4. Strong legislation equals security for all involved.
A key element of the Retirement Villages Act 2003 is the requirement for an independent statutory supervisor, who works as an honest umpire in the sector.
The Act and the supervisor require full disclosure from operators, who are legally tasked with protecting the quiet enjoyment of residents of all facilities throughout the remainder of their lives.
Beyond the physical and pastoral care services, the statutory supervisor has the capacity to determine how much is loaned on a given property and how much the operator is permitted to withdraw from the entity without risking detrimental effects on the financial stability of the entity.
This protects not only residents but any investors, and the legislation is sufficiently robust and well-enforced that instances of breaches are rare, and action by regulators tends to be preventative rather than curative.
Credit for the strong model partly due to the inherent conservatism of operators in the retirement sector, which provides long-term capital gains rather than the quick turn-around profits favoured by speculators.
5. Heartland New Zealand must be looked after as the industry grows.
Economic drivers mean the current growth trend (which is consistent with the residential real estate market) is towards a concentration of expansion in the Auckland region.
That's where all the big operators are putting their development dollars. Put simply, New Zealand's biggest city is where the money is: construction costs don't vary significantly between centres, but an incoming purchaser from the provincial areas may have freed up a lot less equity through the sale of the family home than a would-be purchaser who just sold in Auckland.
Other nearby cities with thriving real estate markets, such as Melbourne, are experiencing the same boom in retirement village growth.
A challenge for the industry to address is how to ensure people throughout New Zealand are adequately looked after, especially in desirable retirement destinations such as the Bay of Plenty, Nelson and the Queenstown-Lakes district.
Plenty of older and retired Aucklanders will be cashing up and leaving town in the coming decades, and after all, everyone ages at the same pace, regardless of location.
John Jackson is an executive director of Senior Trust, a specialist lender to the retirement village industry.
