Call for higher pension rates as cost-of-living increases hit retirees

Retirees would benefit from faster increases in NZ Super, as the cost of living bites, retirement income provider Lifetime says.

Its survey of 700 retirees showed 77 percent were worried about the cost of living. Their top concerns were the cost of groceries, power, insurance, petrol, council rates, dental expenses, the adequacy of NZ Super and heating costs.

It comes after March data from Stats NZ showed superannuitants as a group had inflation of 1.1 percent in the quarter, the highest level of any group in the survey. Overall, households had inflation of 0.8 percent and the highest-spenders had inflation of just 0.2 percent.

"Retirees are not worried about one thing - they are feeling pressure across almost every essential area of daily life," said Lifetime Retirement Income founder and managing director Ralph Stewart.

"These pressures are translating into real hardship. Four in 10 retirees surveyed already struggle to afford council rates on a fixed income, and nearly as many say NZ Super simply doesn't stretch far enough. The core challenge is structural: retirement income that does not keep pace with rising expenses.

"When your income is fixed and costs rise across the board, there's no easy place to cut back. That's a genuinely difficult position to be in.

"The clustering of challenges around fixed income adequacy confirms that the core problem retirees face is income that doesn't keep pace with their expenses.

"It's a multi-factor unhappiness, they're worried about healthcare, they're worried about where they live, they're worried about the cost of living, they're worried about whether NZ Super is enough, they're worried about the income gap."

He pointed to Massey University research that showed some NZ Super recipients are topping up their pension by as much as $1000 a week.

"The gap between NZ Super and some sort of more than subsistence lifestyle within retirement is growing. It's getting harder."

He said there was a lot of talk about how people could cope in the future in retirement, but little discussion about the current generation.

"These people are worried about healthcare. The rising gap between NZ Super and retirement life. Every year NZ Super increases, based on a couple of factors, and then you take the highest, but it all still does link back to the CPI. And that is, you know, largely a measurement of costs for New Zealand, not retirement New Zealand. And maybe there's a better way to index NZ super to reflect the true costs of retirement."

David Verry, a budget adviser with North Harbour Budgeting Services, said it was "virtually impossible" to live on NZ Super alone.

"My wife and I are retirees with a bit of extra income from rental properties, but not nearly enough to cover our spending. We are using our KiwiSaver and other superannuation funds to bridge the gap. Costs keep going up across the board - rates, groceries, power, petrol, etc. We got our annual review of our health insurance - major medical for our children, my wife and me, yesterday … a 30 percent increase in the premium. This will take our health insurance to $30,000 per year - we will move to self-insurance and rely on our savings for the future as this is ridiculous.

"There are a lot of retirees with no debts but requiring accommodation supplements and support for ongoing medical costs."

Jake Lilley, spokesperson for Fincap, the network for financial mentors, said financial mentors would contact him alarmed that they were working with someone who was over 65 and very stuck financially.

"That person having no viable means of gaining ongoing increased income to meet increasing costs or that person incurring unrealistic cost to try and avoid housing instability are common factors.

"Anyone can contact my colleagues at MoneyTalks to find free, confidential and independent support if they are unsure how to address debt or access essentials."

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