Today marks the International Day of Older Persons, a life stage given a unique slant in the year of Covid. While older people in New Zealand face their own problems, we also have an opportunity to help the younger generation see a future they are struggling to envisage.
The definition of an "older person" is subjective, but for the purpose of this column let's talk about those aged 60+. Covid has seen the retirement plans of many disrupted through job loss and plunging interest rates.
We know ageism is one of the last "isms" to be recognised and called out. Those recently made redundant may be lucky to find another job before they become eligible for NZ Superannuation at 65, and we know not all older people were financially secure in the first place.
Those still earning may be supporting their children for a second time – we're hearing
anecdotally of parents helping to pay the mortgages of children who have lost their income.
This may impact the parents' retirement savings meant to support them in the long term.
In the meantime, those savings may be languishing in the bank on rock-bottom interest rates if those doing the saving are wary of the riskier investments.
But even if those aged 60+ are feeling anxious, overall most are the best off of any
generation in New Zealand right now.
Research we've conducted this year shows that this age group was in the 26 per cent of households that were "financially secure". Most have a home mortgage-free, most no longer have dependent children, and a good proportion are still working – at 25 per cent New Zealand has one of the highest rates of people aged 65+ still in paid employment of any country in the OECD.
The universal nature of NZ Superannuation means that no matter what, all will benefit from that safety net as soon as we hit 65.
In contrast, we found 34 per cent of younger households in difficulty and 40 per cent at risk of falling into hardship. The youngest age group, those aged 18-34, dominate the at risk group and are suffering the most from job loss. They are the ones with mortgages, young children, and may have had insecure work such as contracting, freelancing or owning a small business.
Worryingly, they are also reacting in a way that is not helpful financially long term. Other research we've done shows that most New Zealanders have learned some hard lessons through Covid and are now paying down debt and putting savings away. But some in the 18-30 age group are bucking the trend – believing "money is there to be spent" and "live for today; let tomorrow take care of itself".
This devil-may-care attitude could be due to disillusionment about the future; an inability to see past their current problems.
Before Covid, many were upwardly mobile, and these young people are the generation that will play a defining role in post-Covid New Zealand. How do we help them bounce back?
This is where the older generation comes in. We've lived through more than one financial crisis, we've seen how economies pick themselves up, dust themselves off and make their way back up the hill. Covid has wreaked more havoc than most financial shocks, but we know this too shall pass.
Let's avoid inter-generational squabbling and focus on helping each other. It is up to we older New Zealanders to wrap around our younger generation and reassure them there is a future worth saving for. Help them see the big picture, set goals, and make a plan – be it debt reduction, home ownership, having a family and, eventually, saving enough for the retirement each of us deserves.
We can help them understand debt, assess risk, and accrue savings, so that when the next financial shock hits they'll be ready.
Because, unfortunately, there is nothing surer than this will come again. Maybe not in our remaining lifetime, but the one thing the older person can do in the year of Covid is help their kids move on, and build resilience.
• Jane Wrightson is the Retirement Commissioner and heads the Commission for Financial Capability.