Older Men as Grandfathers- Maori Grandfathers in Aotearoa

Judith Davey

26/10/16

 The book I mentioned in my last blog – Grandfathers: Global Perspectives – is now published and our chapter – Maori Grandfathers in Aotearoa (New Zealand) – sits alongside contributions from Denmark, Finland, South Africa, Singapore, Australia, the UK and USA.[1] This is a summary of the chapter which discusses the role of Maori grandfathers and how it is changing.

Traditional Maori views of family and grandparenting[2]

Traditional stories discuss the important role elders hold in the life of their grandchildren. Maui, the famous ancestor, was raised by his grandfather, Tamanui Te Ra (the Sun). Maori kinship terms embody continuity over generations.  The word for grandchildren – mokopuna – literally means a reflection of the ancestors, through whakapapa (lineage). Mokopuna are likened to the soft new shoots of the harakeke (flax), which are protected by the outer layers, i.e. preceding generations. Tupuna – grandparent or ancestor – means “grown from”, i.e. a person from whom we grew. Koro (or koroua) refers to grandfathers and the men in the grandfathers’ generation. Maori proverbs frequently refer to the complementary contributions of older and younger generations.

Whānau is the key Maori social and cultural unit and membership of whānau entails obligations, including whānaungatanga (belonging, supporting and working together as kin). Grandparents, and older people in general, have significant roles as decision-makers and leaders in the whānau, as role models, preservers of good relationships, maintainers and guardians of whānau knowledge and identity. Strong traditional whānau exhibit shared parenting, strong relationships between the generations and the involvement of grandparents in decisions about their grandchildren. Grandparents help grandchildren with their self-image, linguistic competence and special skills, for example grandfathers may impart traditional skills in food gathering. Everyday care and nurturing of children took place in the whānau.

The traditional role of Maori grandparents is further illustrated in the concept of whangai, which is associated with the idea of adoption, although not necessarily legal adoption. Whangai means to feed, in this context to feed and nurture. Traditionally, a couple’s first child was often taken and brought up by grandparents, partly to care for them in old age. Whangai still occurs, not only for traditional reasons. Just as in society in general, grandparents may be raising grandchildren considered to be ‘at risk’ or lack parenting for some reason.

 Maori men as grandfathers

As part of the research, we undertook informal discussions with Maori grandfathers, asking how they saw their role.  Several themes arose from these discussions.

  • Pride in whānau and tribal heritage, acknowledging key male ancestors

The Maori grandfathers emphasised the importance of continuity over the generations; maintaining the role of providing protection to succeeding generations and passing on Maori and whānau knowledge. They spoke about the lessons they had learnt from their grandfathers and previous generations. “My koro taught me a love of the land and the people”.

  • The challenge of reclaiming Maori language and knowledge

Most of the grandfathers were brought up at a time when many older Maori believed that the way forward for young people was through Pakeha education. Hence speaking Maori to children and grand-children was discouraged even though the old people might speak it amongst themselves.  “Being brought up by my grandmother and grandfather, they wanted us to learn the English way because they saw that was the future – you could get a job and an education.” In some cases it has only been in their 40s and 50s that the men became proud of being Maori and have stood forward in leadership roles.

  • Keeping whānau together and keeping a watchful protective eye over the generations

The grandfathers acknowledged that their role was to protect children and promote family cohesion. “I have kept my family all together in the same way that he (his grandfather) did. Tried to keep them up the river on the (tribal) land.” When a daughter had a partner who was worrisome, one kept a close eye on the son-in-law’s behaviour and tried to mentor him.

Change and Diversity

Traditional roles can be harder to maintain in the modern context, for economic and social reasons, with the added influences of urbanisation and migration and the reduction of generations living together. Maori families are undergoing processes of transformation and redefinition, becoming more diverse in size, structure and roles.

Differences relating to rights, responsibilities and tolerated behaviours are significant issues for some grandparents. There may be differences in parenting styles between grandparents and the grandchildren’s parents (and their partners), leading to tensions and a perceived lack of respect for grandparents. There are sometimes real or implied threats about access to grandchildren when relationships between the parents are strained or broken. Where grandparents step in, following the Maori tradition of shared care, they may come into conflict with legal and policy measures. Grandparents raising grandchildren as whangai may not be eligible for government benefits that could come through a more formal arrangement.

The Children, Young Persons and their Families Act (1989) was strongly influenced by traditional Maori concepts of whānau and collective responsibility for children. It mandated the extended family/whānau as the preferred placement for children in need of care and protection. This role more often than not falls to grandparents. So, contemporary grandparenting among Maori still encompasses the roles of nurturing, caring for and protecting grandchildren as well as passing on cultural knowledge and identity. Grandfathers have an important role in this.

 

[1] Buchanan, Ann, and Rotkirch, Anna (Eds.) (2016) Grandfathers: Global Perspectives. Palgrave Macmillan Studies in Family and Intimate Life. Palgrave McMillan U.K.

[2] Useful references for this section include:
Edwards W. (2010) Taupaenui: Maori Positive Ageing. Unpublished Ph.D. thesis, Massey University, Palmerston North
Smith, C. (2010) The Health and Wellbeing of Maori Grandparents raising Mokopuna. Report to the Health Research Council for the Erihapeti Rehu-Murchie Postdoctoral Fellowship.
Walker, T. (2006) Whanau is whanau. Blue Skies Report No.8/06. Families Commission: Wellington.

 

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Older Men as Grandfathers – Why are they invisible?

Judith A. Davey

14/11/16

Grandfathers are “peripheral, distant, or have limited involvement with their grandchildren, usually offering only economic and instrumental support”. [1]

My interest in older people as grandparents goes back a long way. When the New Zealand Families Commission was in its heyday, I worked on an issues paper on older people in families. Then in 2005 came a New Zealand Institute for Research on Ageing report – Grandfathers – Their Changing Family Roles and Contributions. [2]

The report highlighted the invisibility of older men as grandfathers and the lack of research about them. I made several applications to the Marsden Fund on the topic, each time dressing them up in different ways, trying to appeal to the funders – as a neglected aspect of family research; varied cultural expressions; as an exploration of masculinities. All without success.

So when I was asked to contribute a chapter to the “first” book on grandfathers, organised through the University of Oxford, UK, I jumped at the chance. But when I thought about the lack of relevant research in New Zealand, it came to me that a chapter on Maori grandfathers could be a useful addition to the book. I found an excellent Maori co-author in Dr. Cherryl Smith, Director of Te Atawhai O Te Ao: Independent Máori Research Institute for Environment and Health, in Whanganui. Cherryl had previously written a report for the Health Research Council on Maori grandparents raising mokopuna and had helped to write the Families Commission report on Maori grandparents. It was a happy and productive collaboration but a lot of work to piece together scraps of information from local literature, supplemented by discussions with Maori grandfathers.

In this blog I examine the “invisibility” of grandfathers and in a second I will summarise what we found about Maori grandfathers, their role and how it is changing.

The Roles of Grandparents [3]
What is the role of grandparents? There are no training opportunities or courses in grandparenting that I have heard of. Grandparents must construct the role for themselves. They can be ‘family watchdogs’ providing help, support and protection if needed; they can maintain the identity and continuity of the family; be an anchor of stability in transitions and difficult times; and arbitrate in intergenerational relationships.

Research on grandparents, as individuals and part of families, has concentrated almost exclusively on grandmothers. Thus most of what we know is based on women’s experiences. One exception was Neugarten and Weinstein’s typology of grandparenting styles, which measured differences between grandmothers and grandfathers [4]. This, now classic, study depicts grandfathers as more likely to be formal and distant in their behaviour towards their grandchildren, and grandmothers more nurturing and informal.

Other studies found that grandmothers expressed higher levels of satisfaction with their roles than grandfathers. Perhaps this reflects continuity in the grandmother’s role from earlier family experiences of childcare and housework – stereotypical female competencies. Gendered responsibilities have led to grandmothers having more contact with their grandchildren, although this may be changing as family relationships become more informal. The idea of expressive fatherhood – fathers becoming more nurturing towards their children – is relatively recent.

While some interest in grandparenthood has been shown by the voluntary and public sectors [5], there is little academic literature on the topic in New Zealand and what there is reflects international findings. Another gendered aspect of the grandparent role, noted by Missen, is that women often act as proxy or ‘fictive’ grandmothers to children who are not their kin [6]. However, older men’s contact with children outside the family structure (and sometimes even with it) is constrained by concerns about vulnerability to accusations of sexual abuse, which may constrain how they relate to children in general.

An emerging issue for grandparents, in New Zealand as well as overseas, is the increasing number of grandparents with primary responsibility for raising grandchildren, where parents are unwilling/unable do so. About three years ago I posted two blogs about on the subject [7].

So why invisible?
Older men in general have been neglected in social science research. If male identity is firmly attached to the paid worker and provider roles then, in retirement and old age, men may indeed become ‘invisible’. Differences in male and female life expectancies are not the only factors, as grandparenthood can begin in mid-life. Census figures show that the median age of becoming a grandparent for the first time in New Zealand is 53 for grandmothers and 56 for grandfathers. Perhaps as the baby boom generation moves into later life more attention will be applied to the important roles that older men can play in families and in society.

 

[1] Waldrop, D. P., Weber, J. A., Herald, S. L., Pruett, J., Cooper, K .and Juozapavicius, K. 1999. Wisdom and life experience: how grandfathers mentor their grandchildren. Journal of Aging and Identity, 4(1): 33-46.
[2] Davey, Judith and Wilton, Virginia (2005) Grandfathers – Their Changing Family Roles and Contributions. New Zealand Institute for Research on Ageing report for the Families Commission.
[3] Ibid
[4] Neugarten, B. and Weinstein, K. (1964) The changing American grandparent. Journal of Marriage and the Family, 26:199-204.
[5] In the mid 1990s, Age Concern called for research on the roles of grandparents. The 1997 Prime Ministerial Taskforce on Positive Ageing saw grandparenting as one of the key societal investments for the future.  
[6] Missen, S. 2002. ‘Confidants, negotiators, and stress buffers’: New Zealand grandparents talk about grandparenthood. MA Thesis, Victoria University of Wellington.
[7] One asked whether this was a cultural norm or a social problem. The second I looked at the impacts which kinship care had on children and their grandparents. See the Grandparents Raising Grandchildren Trust web site www.grg.org.nz for more information about their work and recent research.

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Have changes to auditing improved the wellbeing of rest home residents?

Judith Davey

This is a difficult question. How to measure wellbeing and quality of care? And, if we can identify indicators, how can we link wellbeing to the audit process? There is bound to be subjectivity, as I concluded in an earlier blog (11/4/16).

One possible measure is the number of rest homes being given four year licenses, indicating high scores for quality of care (based on set standards). If more facilities are being given longer license terms this could indicate an overall increase in quality of care. Since 2011 there has been a marked increase in awarding of 4 year licenses; around 87% of facilities now receive 3 or 4 year certification periods. But surely we need something more detailed.

Interviewees’ opinions
In general, my voluntary sector interviewees (see previous blog) see value in rest home audits and many quoted examples of how they have prompted improvement – especially around staff training and openness. Audit information can be used to compare rest homes in the same area. But there were many criticisms – audits are still too paper-based and do not adequately reflect the experience of residents. “Effect is on documentation not on care.” “How do auditors capture the balance between humanity and the clinical approach?”

Evidence from audit reports
There have been improvements –
• Staff training – many rest homes now use outside education programmes – ACE, Careerforce – as well as programmes from a parent organisation; and also get help from local DHBs. Some have special initiatives to encourage and reward staff.
• Where rest homes are part of “chains” (e.g. BUPA, Ryman) they have access to research and evaluation tools – quality and risk management systems, newsletters to update clinical issues and allow benchmarking between facilities.
• There is also evidence of chain-wide systems of audit and quality monitoring (Oceania, BUPA, Presbyterian Support, Ultimate Care).
• Under the integrated approach, help is available from DHBs– education, advice and consultation, specialist advice, for example on wounds and dementia.
• Better review and follow-up of accidents, incidents and complaints.
• Wider use of satisfaction surveys for family and residents.
• Involving families and volunteers, e.g. male volunteers organising recreational activities for male residents; residents and families helping in gardens.

Problems
There were certainly cases where care was inadequate or residents were put at risk. But a lot of criticisms in the audits related to inadequate or incomplete documentation, or communication. A rest home could fall down on staff standards because appraisals and performance reviews were not up to date. Deficiencies in documentation about accidents and incidents may or may not mean that actual events were adequately dealt with. Perhaps records were not signed off or not adequately presented or discussed at meetings.

Residents’ Satisfaction
Satisfaction surveys for residents and their families are a requirement of regular audits. The reports show that generally the results are good, but sometimes surveys were not conducted or the results were not acted on. There seems to be more faith in satisfaction surveys when they are conducted by outsiders, such as voluntary organisation staff, rather than when they are run internally. Residents are more willing to be open when reports are anonymous. “People don’t want to rock the boat”. Talking to residents individually may also give a truer impression of satisfaction, but this can be hard when residents are very handicapped or cognitively impaired. Sometimes surveys are coordinated by the parent organisation, allowing monitoring and comparison.

Other changes in residential care
I asked my voluntary organisation interviewees about more general change in ARC, apart from the audit process. Clearly change can come from a variety of influences, including policy and regulation, market forces, public requirements and expectations. Overall, respondents considered that there have been improvements – especially a higher emphasis on person-centred care, but also more activities for residents, new wound procedures, more education for care assistants (and they are more involved in decisions).

But less positive changes were also mentioned. The commercial model, especially for rest homes located with retirement villages, brings in the profit motive. There may now be add-on costs for “extras”. “Charging residents for everything – they even charged a blind woman for a garden view”. Larger and more modern rest homes can pay more for staff and have more facilities, but some respondents thought that the loss of small rest homes may have reduced the “family feeling”.

Suggestions to improve quality of care
The people I interviewed were voluble about such changes. The most common remarks concerned staffing- the problem of finding quality staff, higher staff numbers, more money to pay staff more, better training, valuing of staff. These are common issues in recent commentaries on ARC.

Culture was often mentioned, both in the form of culturally appropriate care, but also relating to leadership and quality (business ethos). This includes culture in the sense of the feeling and approach of the facility in general. Improvements in this area would include “more humanistic approaches”, tuning to the wishes of residents and their families; talking to residents and finding out their needs, more meaningful activities for residents – “we still see people sitting around with lack of stimulation”. And a final suggestion – “Let family members and clients write audit reports”.

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Evaluating changes to the rest home audit process

Judith Davey

In New Zealand, aged residential care (ARC) providers deliver a range of services for older people – rest home, hospital, dementia and psychogeriatric care. The Ministry of Health is responsible for ensuring that ARC facilities operate in accordance with the Health and Disability Services (Safety) Act 2001 and administers an audit system to determine if services meet the appropriate standards.

Following audits, rest homes are certified for set periods of time, usually between one and four years, depending on the standard attained. At least one unannounced “spot” audit is performed around the middle of a rest home’s certification period. This is to check that progress has been made on areas for improvement, identified earlier, and that standards have been maintained. Rest homes are also audited when they change ownership or add a new service (e.g. adding hospital-level care).

Rest home audits are undertaken by agencies designated by the Ministry. The reports are reviewed by the rest home and then sent to the Ministry of Health and the district health board (DHB) which set up the home’s contract. The Ministry decides the period of certification, taking into account feedback from the DHB.

Auditors collect information on how well a rest home is meeting the standards by observing it in action; interviewing rest home staff, residents and family members; and looking at documentation of systems, policies, procedures and records.

Evaluation
Auckland University of Technology was contracted by the Ministry of Health to evaluate whether recent changes to auditing processes have resulted in improved outcomes for ARC residents. The focus of the research was on the quality of care and the satisfaction of the residents and their families. Reports from this research can be found at http://www.health.govt.nz/publication/improving-outcomes-age-residential-care

The focus was on changes to the audit process since 2009. The ones most relevant to the project are –
• Introduction of an integrated audit approach with DHBs
• Introduction of unannounced audits
• The publication of online summary and full audit reports
• Changes to the system to handle serious complaints about the care and safety of residents.

Views from voluntary organisations
Part of my input into the research was to seek the views of stakeholders from the voluntary sector. I conducted interviews with staff and volunteers from Age Concern, Grey Power and Presbyterian Support. In this blog I look at their views on changes to the audit process and in the second on ARC in general and how it could be improved, using findings from the research.

Integration with DHBs
Most of the interviewees have a positive view of the integrated approach, bringing the Ministry of Health auditing processes closer to those of DHBs and avoiding duplication. They considered that involvement of DHBs, especially outside the big cities, allows a more localised approach. But the quality of the interactions ultimately depends on personal relationships.

Unannounced audits
This change was considered beneficial and helpful by all the interviewees – it keeps rest homes “on their toes” and up to date, especially in maintaining their quality systems. But there were some reservations and questions about how truly unannounced the audits actually are.

Familiarity with and use of published (on-line) audit reports
Voluntary sector people had mixed responses on this. They may look at reports when a particular situation arises, such as investigating a complaint. “I just pick out the parts I am interested in.” Several said they refer families to the reports when they are looking for residential care. The summaries appear to be more useful than the full reports, which are often seen as too complicated and needing too much time to digest. Some interviewees commented that the reports need to be more resident focussed – “they do not tell you how well people are cared for on a daily basis.” The recommendation was for families to visit rest homes in person.

Public awareness and use of published audit reports
The impression gleaned from the interviews was that very little use is made of the published audit reports by the public and their availability is not widely known.

The general view among the voluntary sector interviewees was that the reports can be helpful, but there was no strong endorsement of their usefulness. They are able to indicate inadequacies – where standards are not being met. “Red flags indicate problems” said one respondent.

Experience of complaints and how they are handled
Rest home audits include scrutiny of complaints registers, and complaints can trigger a “spot” audit. Age Concern staff, especially those involved with elder abuse prevention, can act as advocates for residents and their families when complaints arise and can provide training for staff to help remedy problems. In terms of change, the impression is that generally people are becoming more aware and better informed about the complaints process. Complaints are taken more seriously by the rest homes and there is more accountability and cooperation. Most complaints are settled internally, but DHBs and the Health and Disability Commission can be involved.

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The Benefits of an Epicurean Old Age

Judith Davey

If we look up epicurean in the dictionary, we find definitions such as hedonistic, decadent and pleasure-seeking. An epicure is widely thought is as a sensualist with gourmet appetites. But the real Epicurus, a Greek philosopher, who lived around 300 BC and died at the age of 71, was not an epicurean in this sense at all. What we know of his philosophy – from only a few fragments which have survived – he believed in a simple live and let-live life, each person seeking his (or her) own tranquil pleasure, without an endless pursuit of the new and fashionable. Frantic ticking off of a “bucket list” (not Epicurus’ words of course) does not allow for calm and reflective appreciation of our old age, which is close to what Buddhism calls the “emptiness of striving”. High on Epicurus’ list of pleasures were not gourmet dishes, but calm companionship and growing your own food.

I recently read “Travels with Epicurus” by Daniel Klein. The subtitle is “A journey to a Greek Island in search of an authentic old age”[1] . Klein questions the compulsion to remain “forever young” – a superficial attempt to extend the prime of life and refuse to surrender to old age. At age 73, instead of spending thousands on dental treatment to maintain a youthful smile, Klein used the money for a trip to a Greek island with a suitcase full of philosophy books. The preface to the book is a quote from Epicurus:

It should not be the young man who is considered fortunate but the old man who has lived well, because the young man in his prime wanders much by chance, vacillating in his beliefs, while the old man has docked in the harbour, having safeguarded his true happiness.

Sexist but worth thinking about. The view of old age is as the pinnacle of life, “as good as it gets”.

I was thinking about this philosophy when I reviewed an academic article on the Baby Boom generation and how they might reinvent old age and retirement [2]. This discussed volunteering as a worthwhile activity which can be beneficial for the individuals who undertake it. There is evidence that volunteering contributes to well-being, better health, higher life satisfaction and a reduced probability of cognitive decline. But what kind of volunteering?

Frequently volunteering is seen as a substitute for paid work, consistent with the “activity” theory of ageing, which calls upon the “young old” to maintain the lifestyles of middle age as long as possible. It sounds like the “forever young” approach. Instead, older people may be seeking something which is meaningful as well as making a difference. There needs to be something in it for themselves (something truly epicurean), with fewer hours and lower demands, and more potential for pleasure.

If this is true, then a different, and more creative, approach is needed to the recruitment and oversight of older volunteers. This may mean informal volunteering and community leadership – less formally tied to an organisational base, more flexible, and more consistent with the strengths of older people.

These strengths, especially at the neighbourhood level, were well illustrated at the time of the Canterbury earthquakes (see my blogs in April-June 2013). Stereotyping older people as vulnerable leads to under-valuing their potential contribution. As well as being the recipients of support after a disaster, older people were clearly an effective resource for community and family support in the immediate aftermath and the recovery period. This was Michael Annear’s conclusion in his PhD research [3]. He called older people the “unsung heroes in the aftermath of the earthquakes” and said that the diversity and effectiveness of their coping styles offered valuable lessons for younger people.

So perhaps there is a distinction between highly committed volunteers who do see this as a substitute for paid work (for example, in hospitals, with the police) and people, usually older people, with a much more casual and flexible attachment, who respond to opportunities to help and to gain satisfaction for themselves. The former may need effective day-to-day management, formal contracts and carefully planned resources. The latter type may flow from and be integrated with family and community interests. Volunteering then becomes as social and leisure activity, building on pre-existing social ties, bonding and developing ties with others – even if it is only stuffing envelopes or making tea. This approach will contribute to community building and social integration and will improve the wellbeing and satisfaction of those who participate in it. Would Epicurus have approved?

______________________________________
[1] Klein, David (2012) Travels with Epicurus: A journey to a Greek Island in search of an authentic old age. The Text Publishing Company, Melbourne.
[2] Chambre, S. and Netting, F. (August 2016) Baby Boomers and the long-term transformation of retirement and volunteering. Journal of Applied Gerontology, published on-line.
[3] Annear, M. J.(2013) Urban environmental pathways to active ageing: A participatory investigation amidst natural disasters. Doctoral thesis, University of Otago.

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Age-Phobia

Judith Davey

I have written several blogs on age discrimination, which often strikes on an individual basis – older people being passed over for jobs; being patronised as “lovey” and “dear” and generally being seen as a stereotype rather than as a mature and experienced individual.

What I am calling “age-phobia” is much more high level and generalised. One good example is a quote from the Sydney Morning Herald:

The ramifications (if ageing) could be serious as the elderly become an additional burden to the traditional scourges of poverty and disease. [1] –

How does it feel to be compared to malaria or the Ebola virus? I was hoping that this attitude had lessened since 2002. But, I wonder? Recently someone referred me to a recent TV programme with Nigel Latta. This was “Getting Old: The Retirement Bomb” (9 August, TV1) in the Nigel Latta Hard Facts series. So I duly signed on for TV on Demand and watched it on my lap-top (my TV not being “smart”). It began with Nigel Latta being made up to look like himself as a “really old” man of 70 (he is about 50 now). He recoiled in horror at the bald head, the straggly grey hair and the lined face – in truth the face was more like that of a 100 year- old than any 70-year-old I know. The message was; we don’t want to think about getting old because it is so horrific; we will become ugly and repellent. Then we saw old people lolling around in boats in the sunshine, enjoying a life of dependence on younger generations. But some of those interviewed were actually saying positive things about their lives. This was greeted with amazement by Latta and the children he co-opted to help his cause, probably prompted. To be fair, with the help of the Retirement Commissioner, he was making the point that younger people have to think about their old age and plan for it. But, in the course of this, I feel that he stoked up inter-generational competition, if not outright antagonism, saying how the baby boomers will suffer from the excessively generous policies enjoyed by older cohorts. Age-phobia? Do you agree?

I have just read a recent book by Ben Bova (a favourite science fiction writer of mine, now in his early eighties). It is called “Transhuman.” It is set in the USA and features a biochemist who develops a treatment to reduce cell ageing and to cure cancer. The FBI and even the US President, urged on by the Treasury, tries their best to block his work, to the extent of locking him and his colleagues up in a military base in the Arizona desert. This is because the innovation will allow everyone to live to 100, 120 or even 150. It will, according to the powers that be, “bankrupt America” in health services and health insurance costs. Of course the elite – selected people, including themselves- will benefit, but not the masses. The protagonist manages to escape and distributes his findings to numerous scientific publications, to my relief. I was expecting the FBI to assassinate him. It may be a feasible scenario based on age phobia and the assumption that old age inevitably brings with it dependence and disability.

Sure, there is a lot more acknowledgement these days of the opportunities inherent in an ageing population, and of the contribution which older people can make, economically and socially. But age phobia is not dead. It rears its head with every mention of demeaning words used for older people – wrinklies, grey-hairs, geezers, codgers, fossils and fogeys – even elderly comes with connotations of frailty and dependence. And the very worst that I have heard -“pre-dead”.

To watch the episode “Getting Old: The Retirement Bomb”, visit https://www.tvnz.co.nz/ondemand/the-hard-stuff-with-nigel-latta/09-08-2016/series-2-episode-2

[1] Jerome Socolovsky, Greying of humanity a threat to world budgets. Sydney Morning Herald, April 8, 2002.

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Using income and assets in retirement; Decumulation – the sequel

Judith Davey

Income and Assets in Retirement

On average, the incomes of older people are low and, once they have left the paid workforce, they have few ways to augment them. In a recent survey, the CFFC found that almost half of the people in the 60-64 age group expected that New Zealand Superannuation would be their main source of income in retirement. The majority – 77% – were concerned about living longer than their savings. Thus it is important for retired people to manage their income and assets well. Few have accumulated much over and above the equity in their homes and lump sums on the maturity of superannuation or insurance schemes. KiwiSaver will become increasingly important in this respect. However, many have income from savings in various forms, which can be used to supplement superannuation and to provide a nest egg for large and unexpected expenditures.

As well as credits, there are debits. More people will be entering retirement with outstanding debts. It has become easier to accumulate debt through credit cards, flexible mortgages and student loans, creating a culture where debt becomes a norm. This is important, because repayments reduce the ability to save and make it more difficult to manage on a reduced retirement income.

Options for decumulation
As I mentioned earlier, the mobilisation of assets to improve retirement incomes needs to be considered.

Releasing home equity
Given high levels of mortgage-free home ownership, mobilising capital tied up in houses is an option for many people. There are various ways to do this:

• “Down-size” – move to a cheaper house or a retirement village
• Rent out part of the home or take in paying boarders
• Subdivide the property or use it more intensively
• Sell and move into rented accommodation; the attractiveness of this will depend on how the amount of rent paid compares with the return on (re)-investing capital from the sale of the house
• Sell the home to family or whanau (possible through a loan repaid from the estate)
• Use a commercial equity release product, usually a reverse mortgage in New Zealand (see my June 2014 blog)
• Take out a standard loan secured against a house, but this will incur repayments of interest and/or capital.

Investment options
Outright decumulation means drawing down regularly until capital is exhausted by the expected date of death. But investment for returns in the form of interest and dividends may be a better option. As well as bank term deposits and government bonds, there are also a range of multi- and single sector managed funds and bonds. Investment portfolios may be self-managed or managed by a professional. One possibility is to leave funds in a KiwiSaver account, as recommended by Mary Holm, even after the account has matured. Many KiwiSaver schemes have diversified investment funds and lower fees than other funds. Depending on the provider, money can sometimes be taken out of such funds on a regular basis.

Annuities
Annuities are a way of turning retirement savings, or lump sums from superannuation or life insurance plans, into a regular income. In return for a large deposit, regular payments are made, which can be a fixed amount or variable, and may continue for a set number of years, or until the annuitant dies. The amount payable depends on the remaining life expectancy of the annuitant at the start of the contract (estimated from mortality rates) and the amount of lump sum available.

Annuities remove the need to manage and invest savings, which may be a source of anxiety for some older people. A lifetime annuity reduces the fear that money will run out, but regular payments may be smaller than for a fixed term annuity. These advantages must be set off against the risk that the annuitant may die early in retirement, before substantial benefit has been received, although some annuity plans offer a guaranteed payout period, with continuing payments to the estate.

Despite the advantages, the annuity market is not well developed in New Zealand, although new products are appearing, such as Lifetime Retirement Income (http://www.lifetimeincome.co.nz/). Barriers to the development of an annuities come from both the demand and supply sides. Some are attitudinal – unfamiliarity with the concept and lack of understanding of how annuities work; distrust of financial service providers; the wish to preserve assets for unforeseen events or for bequest. Potential providers have been discouraged by the small size of the local market, uncertainty of future mortality trends and high capital requirements. Further barriers arise from government policies, including tax settings; annuity payments affecting eligibility for means-tested benefits and supplementary assistance; and lack of guarantees regarding the financial security of the annuity provider. In some countries there has been compulsory annuitisation of maturing retirement funds. This could be applied to KiwiSaver.

Inheritance as a retirement lump sum
Finally, as people live longer, inheritances, mainly from sale of the family home, may provide retirement lump sums for “children’ in their sixties.

[1] Commission for Financial Capability – http://www.cffc.org.nz/reviewretirementincomepolicy/may/decumulation-what-we-found

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