3 August 2021

Superannuation Shortfall Inches up for Retirees


The golden years keep on getting more expensive, and Massey University has produced figures to prove it.

They come in the latest report from Massey's NZ Fin-Ed Centre, led by Associate Professor Claire Matthews, and show that even if NZ Superannuation (NZ Super) is too expensive for the Government to afford in the long run, it is still not nearly enough for ordinary people to live on.

The Fin-Ed Centre has researched this subject for years, providing annual reports showing how much money must be added to NZ Super to meet weekly living costs.

Mind the (income) gap

When it comes to thinking about retirement these days it’s all about minding the gap – the income gap that is.


As usual, the Massey University study finds the gap is large, even for a single person living as cheaply as possible. This category is officially described as a one-person household living a “no-frills” life, in a provincial region.

Put more colourfully, this is a single person, who is an instant coffee drinker in a small provincial town, and relying on TV for entertainment - this person would need $162.27 a week on top of NZ Super to get by.

At the other extreme is a person living a “choices” lifestyle in a metropolitan centre. This person likes going on holiday, having a latte each day and making trips to the theatre. The cost of this is $569.51 each week in addition to NZ Super.

For most people in retirement a well-managed drawdown of savings through retirement is the only way to produce this sort of income.

The instant coffee drinker would need to have saved $159,000, while the big city latte drinker would need to have saved $558,000.

Not only is there a gap between NZ Super and actual day to day living expenses, the cost of living has risen in the last year. For the instant coffee drinker in the provinces, the cost has gone up by 6.15% from 2019 to 2020. But if there is a partner, the two-person household faces a 15.59% rise in costs over a year. The single latte-drinker in the cities faces a 1.74% rise.

But the latest Massey University report goes further. For the first time, it compares costs now with what they were four years ago. It finds that NZ Super makes even less of a contribution now than it did then for most classes of retirees.

The provincial instant coffee fan would meet just 66.9% of total income from NZ Super in 2020, down from 79.8% in 2016, while the urban latte-lover would get 21.7% of income met by NZ Super, down from 22.9% four years ago.

But there are subtle distinctions here. Many urban dwellers are paying less money in total than they did four years ago. This distinction is greatest for the single, urban latte drinker.

The survey suggests several reasons for this, including the fact that inflation is not universal and many things that pensioners buy have risen far less than items other sectors buy such as tobacco. Spending also fell for categories like footwear and transport.

The Massey University report said there were several wild cards that would slightly change the impact of these changes. These were mainly state transfers such as the Winter Energy Payment and the Accommodation Supplement.

Photo of Eric Frykberg
Written by:

Eric Frykberg

Semi-Retired, Eric worked in journalism for 45 years across print, radio and television, in New Zealand, Australia and Britain. He has specialised in business, finance, energy, mining, transport and agriculture. He was also foreign correspondent for RNZ for many years. He can be reached on

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