Mind the (income) gap

Research finds an $800 gap between a couple's expenses and their NZ Super Payment.

 
Massey University research on retirement spending shows that all the household categories studied spent more than they received from the New Zealand Superannuation (NZ Super).
 
This was regardless of whether they lived a ‘no frills’ lifestyle in the provinces, or a more 'choices lifestyle in the city, according to the Massey Fin-Ed Centre’s New Zealand Retirement Expenditure Guidelines 2021.
  
 

       

Key findings

  • Even the one-person, no-frills homes in provincial areas (the lowest spenders of all) were spending over $160 a week more than they were receiving from the government.
  • At the other end of the scale, a two-person ‘choices’ home in a metro area was spending almost $800 more each week than the NZ Super provided them. Not exactly a small change.
  • When it comes to thinking about retirement these days it’s all about minding the gap – the income gap that is.
  • The NZ Super has increased since the study was published, however, even factoring in the updated rates, an income gap still exists across both the choices and no-frills lifestyles (as seen within the table below). 

 

 

Massey Fin-Ed Centre’s NZ Retirement Expenditure Guidelines

Couple

Total Weekly Expenditure

Choices Lifestyle Metro Area Provincial Area 
Household Expenses $1,1470.26 $1,176.14
NZ Super Payment $712 $712
Income Gap $758.29 $464.14

 

No-frills Lifestyle Metro Area Provincial Area 
Household Expenses $864.94 $746.81
NZ Super Payment $712 $712
Income Gap $152.94 $34.81

Single person

Total Weekly Expenditure

Choices Lifestyle Metro Area Provincial Area
Household Expenses $1,028.89 $1,116.23
NZ Super Payment $463 $463
Income Gap $565.89 $653.23

 

No-frills Lifestyle Metro Area Provincial Area
Household Expenses $726.19 $604.92
NZ Super Payment $463 $463
Income Gap $263.19 $114.92

"The lump sum required to fund the difference in spending over NZ Super can seem daunting"

—Report author Dr Claire Matthews

Lifetime can help you bridge the income gap

Lifetime helps you turn a lump sum (retirement savings) into a regular, tax-paid, fortnightly income designed to last for the rest of your life. So you can enjoy the retirement lifestyle you deserve.

  • Lifetime helps you take care of the income part of your retirement plan.
  • Lifetime actively manages the key unknowns: your life expectancy and investment returns.
  • Lifetime's investment strategy is focused on supporting you to a ​target age, not on gaining high returns in any one year.
  • Lifetime works to preserve your long-term capital to support your ongoing retirement income payments for life.
  • Lifetime is backed by a dedicated team of industry experts

 

Calculate what your income could be in retirement

"Our purpose is to help people enjoy their retirement with the security of an income for life"

Other ways to help soften the income gap