Housing costs for today’s pensioners already consume a substantial part of the equivalent amount of the New Zealand superannuation, according to Treasury figures. Photo / 123RF
Homeownership rates for pensioners are set to drop from 80% to 60% in less than 30 years, prompting questions about whether New Zealand needs to do more to support
those who rent or have to pay a mortgage later in life.
In 1986, 87% of people over 60 were homeowners without a mortgage and mostly did not work, with 13% renting.
But by 2018, the percentage of homeowners had fallen to 80% and one in five were still paying off their mortgage. About 20% were tenants and 24% were still active.
Dr Suzy Morrissey, director of policy at the Te Ara Ahunga Ora Retirement Commission, said that based on the percentage of people in their late 30s currently renting it, around 40% of that cohort would still be renting in their 60s. .
In 2048, that would equate to up to 600,000 people over the age of 65 who didn’t own a home.
“When NZ Super was introduced it was with the underlying assumption that those who would access it would be mortgage free homeowners.
“Today the reality is very different. Homeownership rates are falling, more and more people have to keep working longer because they still have mortgages to pay, pay rent or don’t haven’t been able to save enough to retire.”
As part of its three-year review of retirement income policies, the commission was tasked by the government to examine whether New Zealand’s superannuation was adequate to support people who are renting or still paying mortgages.
Morrissey said figures he commissioned from the Treasury showed housing costs for today’s pensioners were already eating up a substantial part of the equivalent amount of the New Zealand superannuation.
Of those renting in the 65-74 age bracket, two-thirds spent more than 40% of the NZ Super equivalent amount on housing and 40% of this group spent 80% on housing costs.
“These tenants face very high housing costs compared to NZ Super.”
Half of those still paying mortgages in retirement have spent the equivalent of 80% or more of their NZ Super on housing.
Conversely, more than half of those who own their own homes spent less than 20% of the New Zealand Super amount on housing costs.
The current NZ Super rate for a single person living alone is $1075.48 before tax per fortnight. For a couple, it is $817.32 per person before taxes fortnightly.
Morrissey said the threshold was set in 1993 and is quite low, especially for older people who may want to put money aside to cover expenses such as funerals.
“It may be that some people may qualify for housing supplement support but may not be able to get it because of this.”
In addition to this, it was necessary to ensure that there was enough accessible and affordable rental housing for seniors.
“Because we know where rent prices are, we need to think about how best to facilitate that and how to provide housing for older people.
“We’ve had conversations about how we house our families and that’s really important. And now maybe how we house our seniors, especially those who need to rent, is probably the next conversation to come. have so we can start planning.”
She said housing was not a short-term solution.
“It takes time to build. If we can see this significant future growth of senior tenants. We have to ask ourselves if we have the rental stock in place for these guys when they need it.”
The pension commissioner is due to make her final recommendations on New Zealand’s retirement income policy by the end of this year. It is then up to the government to decide which recommendations it adopts.
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