Renters - can you afford to retire?
Here's a number worth remembering: $367 a week. No, that's not rent, it's the latest weekly rate for a single person living on New Zealand Super in retirement, after tax.
Could you live on that much? Many people do. Apparently 60 per cent of retirees today depend on it, and for 40 per cent it is their sole source of income.
But here's the thing: NZ Super was set up to work much better for those who do not have a housing payment - who either own their home outright or have some other family arrangement.
If you're renting the cost would eat up that $367 quite quickly. Reaching retirement with no savings or investments and having to pay rent is a recipe for living in hardship.
According to the latest census data, the number of households renting is the highest it's been since 1951. Are we going to see a generation of renters?
Soaring house prices keep many of us renting. While in the late 1980s houses cost about three times the average household disposable income, by 2008 they had risen to five times as much.
They have stayed high since.
There is something important to know about renting versus owning and what that means in retirement. It turns out that owning a house is not just about buying a roof over our heads, or setting things up for the kids - it's about getting ready for retirement, too.
The choice to own a home is not just about where you'll live, but also what your retirement will be like.
We renters will have a wider gap between what we need in retirement and what NZ Super will provide. So we'll need to save heaps over our working lives if we stay renting.
KiwiSaver can help shrink the gap between NZ Super and what you'll need to live on above that. Especially if you're renting, you want to make sure that you're making the most of it.
Tom Hartmann is Sorted's resident blogger.