Research Finds 60% of NZers Financially Stressed

Research Finds 60% of New Zealanders Are Financially Stressed And Many Face An Uncertain Retirement

While many New Zealanders are now generally optimistic about the outlook for the economy and believe it has recovered from its vulnerable position during the height of the global financial crisis (GFC); three in five are under financial stress (66 per cent of women compared to 55 per cent of men). That’s according to research released today by Finsia – Financial Services Institute of Australasia.

Adding to this stress, more than two thirds of New Zealanders are concerned about job security or facing a significant reduction in income in the wake of the GFC

Perhaps not surprisingly, older New Zealanders are particularly ‘feeling the pinch’. Nearly two in five New Zealanders claim that since the GFC they have been left slightly worse off financially (primarily consisting of older people, including superannuants), while a little over one in 10 people claim to be significantly worse off financially (mainly those in the 40-59 year age group).

However, despite these high levels of financial stress, concern regarding unemployment and an uncertain retirement coming out of the global financial crisis (GFC), many New Zealanders are not about to change their approach to spending and investment.

The Finsia research, conducted in partnership with UMR Research[1], also exposes widening generational and gender differences; with older New Zealanders and women seeming to have been more detrimentally affected by the crisis.

With regard to the level of savings among New Zealanders, the research revealed a startling division in savings ethic. Thirty three per cent save more than 10 per cent of their income, 29 per cent save between one and five per cent of their income, 14 per cent save between six and 10 per cent, while 23 per cent say they spend all their income and save nothing.

In spite of this admission, New Zealanders’ appetite for credit has continued unabated. Of the 81 per cent holding a credit card, 19 per cent admit they are sometimes charged interest and 26 per cent claim they usually end up paying interest on their credit card debt. Disturbingly, 15 per cent are oblivious to the amount of interest charged by their credit card provider for that debt, particularly women, and those people who are single.

The research also confirms a persistent lack of ‘financial awareness’ among New Zealanders generally. While most New Zealanders (72 per cent) are not confident their retirement savings will provide enough to live on in retirement, just 10 per cent of those with KiwiSaver accounts say that they closely monitor how much their KiwiSaver accounts are worth. Alarmingly, 13 per cent say that they never monitor their account.

Interestingly, men are more likely to monitor the amount in their KiwiSaver accounts than women; and men are twice as likely as women to believe that their KiwiSaver accounts will provide enough money to live on in retirement (29 per cent of men compared to 14 per cent of women).

Dr Martin Fahy, Chief Executive Officer of Finsia, commented on the research findings: “The significant loss incurred by investors and the notable rise in unemployment following the GFC, has left many New Zealanders grappling with spiralling levels of household debt, inadequate savings, and the prospect of an uncertain retirement. Of greatest concern, the crisis appears to have deepened the generational and gender wealth divide.”

“In particular, older New Zealanders and women generally were found to be significantly worse off as a result of the crisis with regard to financial stress and a general lack of financial awareness, especially with regard to retirement planning.”

Key findings of the research study also include:
Since the start of the GFC, 19 per cent of New Zealanders have increased their mortgage payments on their home or investment property, with a higher incidence among men (21 per cent) than women (15 per cent). On the other hand, since the start of the GFC, nine per cent of New Zealanders have decreased their mortgage payments. About three times as many women compared with men have decreased their mortgage repayments.

• On the question of access to credit cards, a staggering 83 per cent of New Zealanders believe access is given too easily without adequate assessment of a recipient’s ability to repay.

• Spending by New Zealanders has continued despite the GFC, with 38 per cent saying they are spending more money now than they did a year ago (42 per cent of men and 34 per cent of women). However, 28 per cent say they are spending less than they did a year ago (25 per cent of men and 32 per cent of women).

• Before the GFC, the age bracket in which the highest percentage of working New Zealanders expected to retire was 60-65 years (35 per cent). However, since the GFC, the age bracket in which the highest percentage of working New Zealanders expect to retire has risen to 66-70 years (40 per cent).
“As is common in the aftermath of any crisis, an opportunity is provided to reflect on lessons learned from this economic downturn. In adopting a ‘back to basics’ approach to savings, debt, consumption and investment, we can begin to really understand exposures and ultimately make positive changes to secure the future for all New Zealanders,” Dr Fahy concluded.

ENDS

© Scoop Media