Dollars and sense: Should I be preparing for an increased retirement age?
Sunday, 28 June 2026
Senior business reporter Rob Stock answers your money questions. Got a question for Sunday magazine? Email it to sundaymagazine@stuff.co.nz
QUESTION: Should I be preparing for the age of eligibility for NZ Super to be raised above 65?
ANSWER: Yes, you should. Most of us should. I am not sure it is the right way to go, but it is the easiest way, and one that the political right is most interested in.
In some senses, the change scans well. On average, we are living longer, and many of us are staying healthy for longer.
That’s a good thing. It is actually humanity’s greatest success. The last four generations of my family have been the first not to live with a reasonable fear that disease will kill them young. Advances in public health and medicine are behind that. However, the ageing population is putting a dual toll on healthcare and super costs.
The proportion of the population aged 65 and over will rise by around a third, from 17.8% today to 23.3% in 2050.
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Paying for this means, according to a paper prepared for the Retirement Commission Te Ara Ahunga Ora, if the government leaves retirement income policy settings unchanged, it has three choices: raise tax revenue by around 5% to 10% per worker, reduce spending on other public services, or abandon its long-term fiscal objectives and allow public debt to grow to over 100% of GDP.
My bet is that long-term, the age of eligibility will move.
It’s not the only option, but we are a bit of a blunt-tool nation, and it looks easy, and harmless, though it will hurt those with the least skills, personal income and worst health the most. Many of us already work past the age of 65 already. Means-testing, I think, is off the table, but higher tax rates on higher private incomes for people receiving NZ Super is a definite possibility. The only thing is the political right won’t like that, just as the political left don’t like the idea of lifting the age of eligibility.
And what about doing a gradual shift where we gradually lift the age while cranking up private savings to compensate?
Still, something has to give. This is dismaying. It means that after having to pay for their student loans, and outrageously high dwelling prices/rents due to our decades-long housing failure, ordinary people will have to do yet more with their incomes. Barring a financial crisis, I do not expect future changes to have much impact on those within 10 years of retirement. Usually changes are phased in.
So, what should you do? The answer is pretty clear. A bit more of what you should already be doing, which is structured and planned saving and investing.
An appointment with a financial adviser, or some self-led research will get you on the way. The more people do when young, the less they actually need to do later. A dollar invested at age 30 is worth a lot more at age 65 (or 67).
And what should the Government be doing? Closing the KiwiSaver “total remuneration” loophole that allows employers to legally avoid having to make KiwiSaver employer contributions. At least give ordinary folk a fair crack at saving a decent retirement nest egg.
I would also argue that there needs to be a re-working of benefits, with a mind to a little social insurance.
There are few things in this world so dispiriting as losing your job in your early 60s, and ageist recruiters refusing to consider you, and having to spend your retirement nest egg.
Disclaimer: The information in this column is provided for general information only and is not intended as financial advice. If you require expert advice we encourage you to seek assistance from a professional adviser.