24 Aug 2009

Baby boomers' children may struggle in retirement

9:40 pm on 24 August 2009

Most baby boomers in New Zealand are well prepared for retirement - but their children need to do some serious planning.

That is according to a survey commissioned by the Foundation for Research Science and Technology which looked at New Zealand will cope with its aging population.

By 2031, an extra 276,000 people are expected to enter the 65-plus age group.

The survey, by the Family Centre Social Policy Research Unit in Lower Hutt and the Population Studies Centre at Waikato University, says the proportion of the population aged over 65 will more than double to 26% in the next 40 years.

It looked at the views of 1680 people aged 65 to 84 and was conducted in 2007. Almost 90% of respondents were reported as being satisfied with their life - but that might not be the case for the next generation of retirees.

The report, Enhancing Well-being in an Aging Society, urges the Government to seriously consider health, income and housing policies to prepare for an older population.

It warns there will be widespread poverty among the increasing older population unless these issues are addressed.

Social policy researcher and author of the report, Charles Waldegrave, urges the Government to start preparing strategies in health and superannuation funding in order to deal with the increase.

Mr Waldegrave says the relative level of superannuation must be maintained, and policies that reverse the declining level of home ownership will improve living standards of future retirees.

The report says most of today's elderly have a high level of well-being, influenced strongly by superannuation, home ownership and access to healthcare.

It found that nearly half of those surveyed live on New Zealand Superannuation with additional income of $5,000 or less, and at least a third have no assets except the family home.

Wake-up call for young

Mr Waldgrave says one of his main concerns is the lack of home ownership among young people.

"People are living longer; their children are very often pretty close to retirement when the generation ahead of them is ready to pass on.

"So it changes the whole notion of inheritance. People aren't getting inheritances now when they were young and could put a deposit on a house when they had young children."

Retirement Commissioner Diana Crossan says young people relying on an inheritance to get them started in life should think again, as baby boomers are living longer and need the money themselves.

Peggy Koopman-Boyden, of the University of Waikato, says some of the survey's results should be a wake-up call for young people to plan for retirement now.