So you think your sorted for retirement? Think again because those unexpected shocks may just put you on your ass!
Kiwi Pension Shock
By: Tony Foote
If you aren’t freehold and going on superannuation only, you are in serious financial trouble!
Not everyone gets the breaks in life. Bills, travel, nights out, cars and their costs and maybe even a jail sentence or divorce seal your fate; and kids, that’s 18 years of dead income due to their costs, excluding UNI. Let’s not forget, no savings as you stop work to have kids! Then there’s divorce, job loss, court costs and costs associated with absolutely everything. Nothing in New Zealand happens without the words “What will that cost me?” Your lifestyle will cost you all you earn and if not freehold by retirement there’s little chance of old age security. This is common in New Zealand.
Working into your eighties is the norm now. Imagine carrying mortgage, and costs into retirement all paid from a meager $606 less tax weekly even before power, gas, food, car and clothing and before you go for your first cruise, fishing trip or overseas adventure. Ample savings entering retirement will help fund this though frequently not likely – you do the math then figure where you will stand on your first pension day.
I moved in with my elderly parents in the nineties. Shortly after, Dad passed away leaving Mum at an advanced age with 17 cats, mostly elderly “Leftovers” from her cat rescue. Advised to euthanize the cats as people thought they were too much for her, Mum refused. I found myself drawn into their daily care.Before I realized, it was 2015 and Mum was fading quickly, I stopped work to look after her full time. Almost immediately I had a heart issue which required a stent installed. These issues led me onto the equivalent of a sickness benefit.
Sadly, dementia came knocking for Mum over the next few years and months. Suddenly, she stopped feeding her cats and didn’t recognize that they were there in her cattery any longer. It was clear there was something wrong and I had been following her up daily to ensure the cats received proper ongoing care. This job then fell completely to me and I did it diligently from then forward, as well as looking after Mum.
I raced towards pension day. Mum worsened requiring hospitalisation for a few weeks then six months at a nursing home dementia unit. This expensive and though owning a freehold home, there were no savings. I remained in her house with the cats with no realistic chance of ever finding another place to live with those sweet old cats – they would all need euthanizing if I could not find a way to hold onto the house. I was paying all her bills and costs, around fourteen hundred dollars per week in the facility and the costs of the cats – vets, food, power bills, rates, insurances and so on out of what was a sickness benefit equivalent at the time, as well as a tiny pool of my own emergency cash and limited savings. I could not sell the house and rest home care was not subsidised as her house dragged her over the financial threshold. I used all my savings to pay down the financial threshold to avoid homelessness. This left me flat broke with no family assistance and many cats to look after with little income. It was a severe struggle but we got through it.
Mum died and left me her house, rent free – with the caveat I pay all expenses and ongoing bills, rates, insurances, maintenance, legal bills, refund of her super to WINZ (due to her time in hospital and rest home) and around fourteen hundred dollars per week in the rest home facility. This decimated my remaining resources. I retired in December that year with fifty one dollars to my name. All the preparation in the world would not have helped me. The unexpected ongoing costs make jump out and kick you. I have nothing more than a simple, no frills, no fresh meat or cheese lifestyle with no car, Using Uber for transport on rare occasions and still buying the best food for the cats.
I got caught out after all this when I applied for the NZ Super as I reached 65. I needed the accommodation supplement as the property related costs were dragging me down but as procedure would have it, WINZ could not move past the fact that there was no rent to claim on the house as I was left it free of rent, but the huge maintenance and costs were stifling – but not claimable so I got nothing but the basic super with no right of appeal. A lesson for us all.
Happily, the cats all survived and all now very, very old and still healthy!
