Sep 27 2024
A new report from the Te Ara Ahunga Ora Retirement Commission highlighting the valuable role home equity release products can play in improving the financial well-being of New Zealand retirees is welcomed by Ralph Stewart, managing director of Lifetime Retirement Income.
Stewart is at the forefront of this conversation, championing innovative solutions that address the growing retirement income gap.
The report highlights that for around 25% of older households with limited retirement income and savings but substantial home equity, tapping into this equity could provide a much-needed financial lifeline.
Stewart is encouraged by the Commission’s findings.
“We know that approximately 60% of those aged 65 or over rely largely or entirely on NZ Super, while around 80% own their own homes. And the average retired Kiwi household spends more than they receive from NZ Super, according to Massey University’s Retirement Expenditure Guidelines.
This retirement income gap is real and growing, and it’s time to close it, Stewart says.
Lifetime Home, a product of Lifetime Retirement Income, was launched to address this very issue. It’s New Zealand’s first and only debt-free home reversion scheme, allowing seniors over 70 to convert their home equity into a steady income stream without adding to their debt burden.
“The idea that a quarter of Kiwi retirees could be living more comfortable lives provides us the motivation to innovate,” Stewart says.
The Retirement Commission’s report also underscores the complexity and misunderstandings surrounding traditional equity release products.
Stewart emphasizes that thoughtful planning and education are key to ensuring retirees can make informed decisions.
“The goal of retirement income planning should be to provide stable and enduring income for those no longer working, not merely to accumulate wealth,” he says.
As part of its product development process, Lifetime Retirement Income engaged with retirees across New Zealand to better understand their needs and concerns. The findings revealed significant gaps in understanding and planning among those considering equity release products.
“Many retirees had not considered family financing options or sought professional financial advice before entering into agreements,” Stewart says.
He sees the Retirement Commission’s report as a wake-up call for the financial services industry, which has historically focused on saving for retirement rather than managing income during retirement.
“Managing a stable retirement income for 30 years or more is the new frontier, and the Commission’s work provides valuable guidance on this key component—home equity release.”
As a thought leader in the retirement income space, Lifetime Retirement Income is committed to continuing this vital conversation.
“When will the financial services industry recognize that there is a 30-year retirement life after we stop working and saving? It’s the future for us all.”
For more on Lifetime Home: www.lifetimeincome.co.nz