Previously I quoted research that showed a comparatively low proportion of older people in New Zealand can be said to live in poverty. But, however small the numbers, we should still be concerned about them. What are the factors which can create disadvantage for older people? And how important are personal characteristics, such as gender and ethnicity?
It seems obvious that low income in retirement will be associated with lower living standards. Certain groups are especially vulnerable, particularly people whose only income is New Zealand Superannuation (NZS). But the problem may be situations where expenses are high and difficult to manage rather than deficiency in basic income. There is a greater risk of disadvantage where older people:
• are paying rent, especially when they live alone;
• have high costs related to healthcare or disability (not covered by the public health system);
• have costs arising from obligations to family, whanau or friends;
• have excessive debt servicing costs or costs arising from a lack of financial knowledge, budgeting skills or from behaviour, such as addictions or financial exploitation by others.
Is the answer to increase the rate of NZS overall? Wouldn’t this be a blunt and costly way to reduce poverty, since it would mean additional payments to everyone regardless of their income and circumstances, when the problem is restricted to a small proportion? Wouldn’t it be better to target the risk factors listed?
The high rate of home ownership among older people (which peaks at 77% for people aged 70-74) – most of it debt-free – is an important factor in helping them to manage on their retirement incomes. According to ELSI data , only 3% of those who own their own home live in low-income households as opposed to 47% who are paying rent.
But home ownership rates are falling in all age groups – from 53% overall in 2006 to 50% in 2013. This will lead to higher housing costs among oncoming cohorts, suggesting that poverty levels for older people could grow in the future.
Marital status and household circumstances
Studies here and overseas show that single people are more likely to be in income poverty and to have lower living standards than couples/partnered people. Older New Zealanders living alone have a higher rate of poverty (15%) compared with those living in two-person households (5%). This reflects differences in housing tenure and incomes.
Living circumstances vary significantly by gender in the older population. Women are more likely to be widowed and/or living alone than men, because of differences in life expectancy. Most men (70%) over the age of 65 are partnered, but only 42% of women are. Over the age of 85 only one in ten women has a living partner, but almost half of men do.
Hardship rates (ELSI) are slightly higher for non-partnered women aged 65 or over than for non-partnered men. Following are some possible explanations for why women are disadvantaged in retirement.
• Women live alone longer in retirement and this brings higher costs of living.
• Women generally outlive their male partners and the costs associated with caring for their partner may reduce their income and assets.
• Women are less able to save for retirement as they take time out of paid work to raise children and possibly to care for older family members.
• Women, when in the workforce, have lower incomes than men.
• Women who are divorced or separated may be disadvantaged with respect to assets and income.
This suggests that lifetime experiences and social expectations result in women being at greater risk of disadvantage in old age. Measures to improve gender equity need to be wide-ranging and lifelong.
There is a close relationship between low socio-economic status and poor health. This applies throughout life and is one of the pre-retirement factors which influence living standards later. Where older people are solely dependent on NZS, health-related costs may be a significant drain – for GP consultations and medication and, further, to deal with problems related to hearing, sight and dental care.
Frailty is more prevalent among older people who have low incomes and wealth and less secure housing. This may mean extra costs for in-home support. Thus health problems can have a detrimental impact on older people who are disadvantaged in other ways.
Many of the risk factors associated with disadvantage in later life are characteristic of the Māori and Pacific Island populations – low incomes, lower levels of home ownership and poorer health. Obligations to whānau and the cultural roles carried out by older Māori may bring about extra costs.
The ageing of the Māori population may see greater demands upon whanau to provide support for older people, even though this population is itself disadvantaged compared to New Zealanders as a whole. Measures to improve the socio-economic circumstances and health status of the Māori and Pacific populations as a whole will benefit their older people. Even though these populations are youthful now they will age rapidly in the future, resulting in greater ethnic diversity among older people.
Recognition of these risk factors and the circumstances of disadvantaged older people calls for active policy responses. Should greater support for older people be targeted at the groups identified? If so, how? Or should all older people receive the same support, whether they need it or not? What do you think?
Dr Judith A. Davey
Age Concern New Zealand voluntary policy advisor
Senior Research Associate, Institute for Governance and Policy Studies, Victoria University of Wellington