For single people living a “no frills” lifestyle – at the second quintile of spending in the Household Economic Survey – in metro centres, they’re $166.92 a week short. For provincial areas, they have to top up $42.33.
For single people with a “choices” lifestyle – at the fourth quintile – they have to top up $252.20 in the metro centres and $233.47 in the provincial areas.
Two-person households were topping up anywhere from $109.04 a week for a no-frills metro lifestyle, to $951.95 for a choices life in a big city.
Report lead Associate Professor Claire Matthews said retired households were spending more on food than consumer price index data allowed for, which put pressure on budgets.
She said council rates were also a major issue.
“This is a key unavoidable cost of home ownership for current retirees and the ongoing increases, which are expected to continue, cause angst for many,” the report said.
Cumulative increases over the past three years ranged from 20.9% in Auckland to 47% in Wellington for people without a water meter.
“Rates are a huge issue. You do hear that a lot and this kind of just puts some numbers around that and provides some evidence,” Matthews said.
She said the minimum recorded was a 20% increase over three years. “Even that’s a huge amount.”
The report calculated the lump sums needed to top up income.
Single people in metro areas would need $181,000 saved for a no-frills life and $273,000 for choices.
In provincial areas, single people would need $46,000 for a no-frills life and $252,000 for more choices.
Two-person households in metro areas would need more than $1 million for a choices life and $450,000 in the provinces.
Matthews said research done as part of the latest release showed that KiwiSaver would be enough to get most people to the required amounts, provided they started investing early.
It modelled a range of scenarios showing that someone who begins contributing to KiwiSaver from their early 20s, even after withdrawing around $75,000 for a first-home purchase at age 35, could still reach the lump sum needed to fund a modest retirement by age 65.
But for those who delay joining KiwiSaver until their 40s or 50s, or who pause contributions for several years, the gap between savings and retirement needs gets much harder to close.
Even with a first-home withdrawal, it was achievable as long as it was made early enough.
“It does say if you start young, you’re going to be well on the way even if you just do the minimum,” she said.
“Even if you buy your first home, as long as you do it early enough… and have to start again at a young enough age, you can cope. But ideally, you would start saving at a slightly higher rate once you’ve bought your house.”
But she said the large numbers of people who were making KiwiSaver withdrawals for hardship reasons could be costing themselves in the long run.
“From the numbers that there are, it almost looks to me – and purely on a numbers basis – it almost looks like it’s too easy to get your money out, given the number that it’s happening to.
“It’s either that or we have got a really serious problem and people are robbing their future selves in order to deal with their current situation.”
She said overall life was getting harder for retirees.
She said while the data showed retirees needed more, there were still people managing on just the pension.
“It just may not be the retirement lifestyle that you were dreaming of during all those working hours.”
How much do you need to save?
$181,000 for a one-person “No Frills – Metro” lifestyle$273,000 for a one-person “Choices – Metro” lifestyle$118,000 for a two-person “No Frills – Metro” lifestyle$1.033 million for a two-person “Choices – Metro” lifestyle