Yesterday’s inflation figures show a welcome slowdown in the pace of price rises. However, even with the recent lift in NZ Superannuation (NZ Super), retirees still need alternative sources of income to fund a comfortable living standard in retirement.
In most cases, this means gradually drawing down accumulated capital, according to Ralph Stewart, Founder and Managing Director of Lifetime Retirement Income.
Inflation, measured by the consumer price index (CPI), rose 6.7% over the year to end March 2023 according to data from Stats NZ. While heading in the right direction compared to 7.2% in December 2022, it remains at levels not seen in almost three decades.
“For retirees, the devil is in the detail,” Stewart says. He notes that some of our retired population’s biggest expenses have increased by more than double the CPI.
“Retirees spend a chunky portion of their budget on food – up to a fifth of monthly expenditure. And, as reported earlier this week, food prices are up 12.1% year-on-year, fuelled by a 14% jump in grocery food and a staggering 22% for fruit and vegetables.
“For those hoping to enjoy their twilight years in financial comfort, NZ Super simply won’t cut it. It was a stretch in a moderately inflationary environment. Now it’s a pipe dream,” Stewart says.