KEY POINTS:
The credit crunch has brought pain to Main St. And it's likely that more anguish will be felt as the effects trickle through to jobs, property prices and returns on equities and bonds.
But spare a thought for older people, who have been the worst hit of any generation.
According to Grey Power, the proportion of retired people living on government superannuation had risen by as much as 10 per cent from this time last year.
The staggering rise is due largely to the collapse of finance companies and property investment companies as well as the effects of the credit crunch. Most that have lost capital have no means of replacing it.
Virtually all older people who have investments have seen their income depleted even if they haven't lost capital. Income on equities and bonds looks set to take a hit.
And those who have run for the cover of bank deposits are seeing interest rates drop. Yet they, like the rest of us older people, are paying higher prices for basics such as food, utilities and petrol. Another group, those nearing retirement, will be watching on with trepidation.
There is unfortunately no magic wand for the financial problems faced by older people, says Jeff Matthews, senior financial adviser at Spicers Wealth Management.
Economies do recover from financial disasters such as the one we're experiencing and those that we have experienced in the past, such as the 1987 stock market crash, the Asian crisis, technology bubble and more.
But if you're aged 50-plus, you don't necessarily have the time to wait. It's this age group that often has its eye fixed firmly on its retirement savings and often feels a sense of urgency. Making any money grow in the next two or even five years is going to be hard yakka.
Financial planners are scratching their heads when it comes to advice for older people who need income from their investments.
Robert Oddy, director of International Financial Planners, says older people should be looking very hard at their spending - especially with the cost of basics and health insurance ratcheting up. "They should be joining Grey Power to take advantage of the discounts and using their SuperGold cards."
The discounts can be useful, such as a 5 per cent saving on all Mad Butcher goods and 10-15 per cent off some agencies' real estate commissions.
For frugal older folk many of the discounts on things such as gym memberships or merino wool products won't have much of an impact on their financial situation, which Grey Power says is dire.
The most recent survey of 1325 Grey Power members found that 756 went to bed early to save power, 709 buy from op shops, 545 couldn't afford to pay for heating, 282 can't afford to go to the doctor, 148 can't afford phones and 102 couldn't afford basic foods.
Oddy says older people can save money by limiting gifts to grandchildren.
He also sings the praises of haggling - even if it breaks the habit of a lifetime. "Cash is king and those businesses too arrogant to give discounts will suffer."
"It might sound archaic," he adds, "but having a garden and growing your own vegetables can save money."
Another good money-saver for older people is to use the free off-peak public transport now available to them.
One thing that those nearing retirement and adult children who worry about their parents' finances sometimes fail to understand is that older people's spending curtails over time.
New retirees often take overseas trips or spend money on things they've always dreamed of. By the time they're in their late 70s and older, many people spend little more than the basics of food, utilities, clothing and healthcare.
One wildcard for many older people's budgets is health insurance. Matthews says a typical retired client receiving government super and earning $30,000 from investments per year would pay about 12.5 per cent of their total income on a comprehensive health insurance policy.
"If you have a heart attack or stroke you go into the public health system. It is only for things like varicose veins, hip replacements and cataract operations that you would pay with your own money. Often your insurance limits mean you are only getting 50 cents in the dollar from your Southern Cross anyway."
He recommends clients who can afford health care cover pay the premiums. But those who are struggling financially question whether they would be better off self-insuring by putting money aside.
One avenue for older people feeling the pinch is to take out a reverse equity mortgage, which is also called a lifetime loan or home equity release loan. These enable the over-60s to borrow against the value of their home, but make no repayments until they sell or die.
Despite talk that reverse equity (lifetime) loans have all but dried up after Bluestone and Westpac withdrew from the market, older people can still borrow money against their own homes from companies such as Sentinel, Dorchester and SBS Bank.
The conditions in many cases have tightened. And these loans should not be taken on without considerable deliberation because they can eat up an older person's capital very quickly.
There are other ways to raise money from your home, such as selling a portion of it to a family member. Or if you still have a mortgage on your own or investment properties, costs can be cut.
But don't leave it until the last moment, says Megan Salt, chief executive of the New Zealand Mortgage Brokers' Association, or your options may dry up.
Older people who own investment properties will also be watching that market nervously with prices expected by many commentators to fall further.
Providing those properties are positively geared - that is the rent exceeds any mortgage and other costs - investors may want to sit still. Those with loss-making investment properties should "dump the monkey" from their backs and take what equity they can from them, says Matthews.
Each client is different, but for older people with investment portfolios Matthews is recommending they put 80 per cent in income producing investments such as bonds and 20 per cent in growth assets. This time last year the split was nearer to 70/30.
Those fixed income investments should be with A to AAA-rated investments such as Rabobank, Westpac, ASB, BNZ, Telecom or ANZ/National, says Matthews.
They shouldn't, however, be complacent and keep all their money in one bank because here in New Zealand we don't have deposit insurance and they could lose everything should a bank collapse.
