Why single people are feeling the financial crunch

Single older people are bearing the brunt of rising prices, and women may be particularly hard hit.

Data from last week's CPI shows that over a five-year period, households comprised of single people aged over 75 had the highest level of inflation, up 27.2 percent, compared to a general rate of 25.3 percent.

Over two years, they had inflation of 7.8 percent compared to total inflation of 5.4 percent.

Those aged 70 to 74 had the next highest rate of inflation over five years, 1.8 percent higher than the overall level.

Over a two-year period, households of single people aged 65 to 69 had inflation of 6.3 percent.

Every age group of single people had a higher inflation rate than the overall rate over five years.

Economist Shamubeel Eaqub said it was because these households spent more of their money on essentials, which had experienced the biggest price increases.

"Inflation in recent years has been very focused on things like food, rates, insurance - those things take up more of the household budget.

"So the households who are spending more of their income on necessities have experienced more of it. The deflation was on things like buying TVs and stereos, stuff like that. Single older people aren't buying many of those things."

He said many of the costs of running a household were not reduced by only having one person in it.

"A single household is really expensive because you're carrying all the rent, all the power, all those kinds of things that are more to do with the unit of house rather than the unit of people."

One woman who contacted RNZ said she felt women were under more financial stress than their male counterparts. She estimated that having children had cost her $100,000 that would otherwise have gone into retirement savings.

"My brothers, in comparison, who did not take any time off to raise children, are much better off than me.

"Us women have given birth to and raised the generation of New Zealanders now in their 30s and 40s. We did this in the days before the widespread availability of full-time child-care by paid professionals."

Eaqub agreed that older women were probably finding it tougher.

Women are reaching retirement with materially less in their KiwiSaver accounts than men.

Work by the Retirement Commission found that while there was not a lot of difference in how people aged over 65 felt about money, women were worse off. Just over half the women in its research had income below $30,000 a year compared to 42 percent of men.

It said women's lower KiwiSaver savings were not because women were contributing less but because they earned less.

Older women were nearly twice as likely to live alone as men were and were reporting taking steps such as cutting down on food to save money.

Single older women were twice as likely to have experienced significant financial impacts due to the death of their spouse than men. Almost 40 percent of single women aged 65 to 74 said they did not feel at all confident about a financially comfortable retirement, compared to 25 percent of single men. But single women aged 75-plus were most likely to say they felt financially comfortable.

Eaqub said wage discrimination against women could compound over the lifetime to have an effect on their savings.

"Women, on average, earn less than men and take more time out of work. Time out of the workforce has quite a big impact on people's lifetime incomes and lifetime savings."

Liz Koh, from Enrich Retirement, said retirement was a struggle for women who were alone, or those in second relationships where finances were kept separate.

"It's a well known fact that women earn around 10 percent less than men on average. This affects their KiwiSaver contributions and their ability to save. Women also have periods of time out of the workforce taking care of children and again, this impacts on retirement savings. Add to this the fact that women live longer than men, which means they need a higher level of retirement savings to avoid running out of money before the end of life.

"Women can be less confident investors, and a more conservative approach to investing can mean lower investment returns over the long term. On the other hand, women plan ahead and are receptive to receiving advice.

"There is a rather alarming trend, which is the number of women reaching retirement who do not own a home or who still have a mortgage. Separation and divorce combined with lower earning power are contributing factors to this situation. Owning a debt free home is essential for a comfortable retirement and those who are renting or still paying a mortgage struggle."

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