New research reveals the added cost of growing older

Te Ara Ahunga Ora Retirement Commission has released a new study looking at the often-unforeseen financial impacts of health conditions as people age.

In-depth interviews were conducted with older people grappling with disabilities or experiencing difficulties with a physical condition since turning 65 and the additional expenses they face.

Te Ara Ahunga Ora Research Lead Dr Jo Gamble, who conducted the qualitative study, says becoming less able in some way as one ages is a natural part of human experience and needs to be planned for.

“Our results show that some people have attained mortgage-free status but have very little in the way of cash-wealth (asset rich but cash poor). Homeowners with physical impairments face the double burden of expenses and financial requirements to maintain the value of their asset plus unexpected or ongoing expenses related to health,” she says.

“On the flipside are individuals who don’t own their home but have nest eggs put aside. While they don’t have the responsibility for home maintenance, they also don’t have the ability to draw on a significant asset so face the fear of outliving their savings.

“In both situations, a major health-related expense can be impossible to consider without health insurance. However, as premiums increase in later life, some people find the cost prohibitive and cancel their health insurance. With no opportunity for paid work to pay off debt, superannuitants with worsening physical or health conditions must wait their turn in the public health system, in some cases for years which impacts on quality of life.”

Of the approximately 842,100 people aged 65+ in Aotearoa in 2022, 129,522 people received the disability allowance (15%). However, Dr Gamble says this is low given 59% of over 65s are considered disabled[1].

“The disability allowance contributes to improved quality of life for those receiving it, but is subject to means-testing, which looks at household income,” says Dr Gamble.

“In the research conversations, people reported that the barriers to accessing it include lack of awareness about the allowance, unfamiliarity with Work and Income/MSD, pride in being self-sufficient, shame in feeling incapable, and lack of proactivity by GPs/health professionals."

One of the case study participants, 77-year-old Yvonne, who had to give up work to look after her husband after a stroke, and who is also dealing with macular degeneration, shared her struggles of dealing with health conditions.

“It’s drawing on our savings - we can pay our way, but it depends on how long we live. Every year I have to cut the budget. They need a higher limit on savings for the accommodation allowance. I know what we have isn’t a lot, two funerals would be about it!”

Increasing the cash asset threshold for the Accommodation Supplement was one of the recommendations made to the Government by the Retirement Commissioner as part of the 2022 Review of Retirement Income Policies. This recognises that an increasing percentage of NZ Super is needed to meet housing costs and that homeowners have limited options to reduce their housing costs.

For 74-year-old Andrea who has several issues with her eyes, she said: “Financially, it’s been a significant impact, I have to pay out on a constant basis. Vision is one of the most important parts of life. I can’t walk up and down the stairs in the dark, so I have to make sure someone is there to help me. There are times I can’t drive and have had to go on bus or taxi. Taxis aren’t cheap. It confines you a bit, I used to roar around everywhere.”

Retirement Commissioner Jane Wrightson says Te Ara Ahunga Ora is committed to broadening understanding of what impacts New Zealanders heading into retirement.

“It’s important we have quality research and evidence available on matters relating to retirement that can be used to help inform policymakers, financial service providers and disability services to better support our ageing population,” she says.

“This research is also a nudge to those able to plan their retirement income to factor in increased health costs. And to MSD and health professionals to understand and clearly explain the financial assistance that can be available.

“While this doesn’t make for easy reading, those who have shared their stories for this study have provided valuable insights into the lives of older New Zealanders, the day-to-day struggles many are dealing with and the sacrifices they are making as a result. I want to thank those who took part and know it is not easy to share these experiences.”



For interviews:

Anika Forsman  | Director, Stakeholder & Communications 

Ph: +64 21 246 4302


[1] National population predictions, Stats NZ