But there’s a way to bridge the gap between NZ Super and what’s needed for retirement.

It is not just the workforce feeling the effects of Covid-19 on livelihoods. With interest rates now scraping the floor, many retirees are missing out on vital income too.

Historically, retirees have used the interest on low-risk term deposits to supplement their retirement income to help fill the gap between New Zealand Superannuation payments and the reality of their retirement spending.

Research from Massey University shows that even people living on their own with a 'no frills' lifestyle in the provinces need to supplement NZ Super payments by more than $160 a week. For couples living in cities that prefer more 'choices', the income gap can be over $800 per week.

With the Official Cash Rate (OCR) at record lows, meaning interest rates on term deposits (a staple investment for many retirees to generate income to fill that gap) are currently so low that, once tax and inflation are accounted for, savers can find themselves going backwards.


The Reserve Bank of New Zealand (RBNZ) has suggested its base rate - the OCR - could even go negative as it works to bolster the economy against the financial effects of Covid-19. While term deposit rates should stay above water even if the OCR dips under zero, there is still room for them to fall further from today's level.

It is when interest rates are low and financial markets volatile that New Zealand's own Lifetime Income product comes into its own, says Ralph Stewart, the founder and managing director of Lifetime Retirement Income.

It provides investors with a guaranteed income each fortnight by converting a lump sum investment into an income lasting for the person's lifetime. The bigger the lump sum invested, the bigger the fortnightly payment – helpful in bridging that gap between NZ Super and the retirement lifestyle people had hoped for.

Ralph Stewart, founder and managing director of Lifetime Retirement Income. Photo / Supplied.
Ralph Stewart, founder and managing director of Lifetime Retirement Income. Photo / Supplied.

"We do the gap – Lifetime Income is a simple, convenient supplement, paid fortnightly the same day as NZ Super, tax paid, fees paid, and you don't have to worry about running out of money," says Stewart.

"Retired people don't know what returns are going to be next year, so they don't know what their income is going to be – and they don't know how long they're going to live. A Lifetime Income removes both these risks and helps create certainty in retirement," he says.

"It's particularly relevant just now, when we're seeing so much uncertainty in the financial markets."

"Retirees need to reassess their income streams and I would question whether they should stay invested in term deposits," he says. "Once upon a time these provided rock-solid earnings but since the 2008 global financial crisis, bank interest rates have plummeted and, with them, bank deposit returns."

Lifetime Retirement Income is New Zealand's largest provider of guaranteed retirement incomes, offering a practical, secure way of converting savings into an income stream for life.


If you're retired and want a worry-free retirement income, talk to the issuer and manager of the Lifetime Income Fund, Lifetime Asset Management, about modern retirement income solutions. They'll be able to provide you with the product disclosure statement and answer your questions.

For more information: www.lifetimeincome.co.nz