The Government’s much-touted tax cuts come into effect today. Superannuitants won’t be able to buy even a cup of coffee with theirs, says Ralph Stewart, founder and managing director of Lifetime Retirement Income.

A single person receiving NZ Super (on tax code M) will be $2.15 a week better off under the new tax thresholds, while a couple will gain an extra $4.31 a week.

“It’s not nothing, but it’s close. Meanwhile spiralling living costs mean many Kiwi superannuitants – who, let’s not forget, are also voters, consumers, and tax payers – are having to make tough choices between eating or paying the bills this winter,” Ralph says.

He notes that NZ Super payments, which are based on 40% of the average wage, continue to fall well short of the actual cost of living in retirement.

“If we look at Massey University’s Retirement Expenditure Guidelines (2023), the retirement income gap – in other words, actual day-to-day living costs less NZ Super – is $328.89 per week for a single city-dweller and $218.38 per week for a couple. And that’s just for a no-frills lifestyle. If you want to have choices about how you spend your time in retirement, the income gap is far higher.”

He says it’s only going to get worse with hikes in council rates, insurance, health care, and other essentials, particularly for the 60% of superannuitants whose only source of income is NZ Super.

“These tax cuts amount to the kind of loose change you might be able to scrabble together searching under your sofa cushions. They’ll do little to ease superannuitants’ financial hardship or improve their quality of life,” Ralph says.

“We talk to retired folk regularly and they’re worried. When their budget barely stretches to cover day-to-day essentials, what happens if they have an unexpected expense, like a blocked toilet, or vehicle breakdown?”

“We’ve known for a long time that NZ Super isn’t enough to meet the needs of an ageing population. KiwiSaver is a step in the right direction, but it’s of little help to today’s retirees. They deserve more than a token gesture,” Ralph says.

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