Can you rely on NZ Super?

OPINION: The spectre of lifting the age of retirement to 67 has risen again, as has cutting the incentives for investing through KiwiSaver.

The right-of-centre ACT party’s alternative budget would see a gradual increase in the age at which people qualify for New Zealand Super to 67.

Effectively, the age of eligibility would increase each year by two months.

That would mean people working for longer.

At the same time under ACT’s alternative future, saving more would be made harder for people doing it through KiwiSaver, without the government contribution, and the KiwiSaver first-home subsidy.

Of course, ACT argues its plan would also cut government spending, leave more money in workers’ pockets as a result of tax cuts (more in higher-earners’ pockets, of course), stimulate the economy, and make those willing to work better off and, I suppose,

GOLDEN RULES:

■ NZ Super will remain in place ■ But retirement ages may rise ■ Responsibility for decent retirements remains with individuals.

better able to save and invest.

ACT also argues KiwiSaver has been a dud, and not lifted household savings rates.

But there are two key things in all of this for ordinary people.

The first is to notice that ACT is not calling for NZ Super to be abolished. Truly, this shows that even the right of our political spectrum isn’t imagining a future without it.

Those young people who think NZ Super won’t exist in the future should take some heart from this. It remains the bedrock of our nation’s retirement expectations.

The second is that they will have to live with calls for change to NZ Super, and probably actual changes.

They very possibly should expect to work past the age of 65, though, actually, many people already have to, or choose to, partly because NZ Super is pretty meagre.

Our population is ageing. That’s a massive success for us. Extra years of life is great. If you’re 20, or 30, unless you don’t take care of yourself, you really should expect to live longer than a newly minted 50-something like myself.

But the economics of that are challenging. The two keys to paying for decent retirements are pre-funding that future by saving and investing – which ACT sees as a more fully private affair – and growing productivity and the economy.

But actually, for young people, apart from using their vote to ensure effective, fair government, the things they need to do to cope with the future are relatively simple.

They need to get themselves educated for a decent-earning career, keep themselves healthy, so they are not clapped out by 60, and amass enough wealth (including a fully paid-off home) so they are able to live decently in their older years.

That wealth might not have to be all economic. Family, or community wealth in terms of younger generations to live with, or be partly supported by, is wealth.

You will have your own views on how you can achieve this for yourself, and whether ACT’s recipe is one that would deliver greater wealth to the privileged.

But it’s never been a good plan to leave your retirement planning solely to the government.

We’ve established that the government is a key partner for your retirement but you’re responsible for taking your retirement from scraping by to whatever degree of terrific you want, or can manage.

I can’t see that ever changing, though I don’t have a crystal ball.

NZ Super will remain the foundation of our retirement years, which is comforting.

The rest is up to you, and your family, however you define it.

It does seem likely that NZ Super might be less generous in the future than it is now.

That is less comforting. It’s not a recipe for despair though.

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