This article was originally published on Stuff on 2 Sep 2025.
Believe it or not, New Zealanders are among the wealthiest people in the world – at least on paper.
By measures like household net worth and wealth per adult, we consistently rank in the global top ten. But here’s the uncomfortable truth: a growing number of Kiwis are reaching retirement as paper millionaires who struggle to cover the weekly grocery shop.
Many of us are asset-rich and income-poor, and the gap between those two things is becoming a serious problem.
For decades, the formula was simple: buy a home, pay it off, then retire comfortably. Rising house prices did the heavy lifting.
But that formula worked for a version of retirement that no longer exists. We are living longer – much longer. A retirement today often stretches well beyond 10 years; for many it’s 25 or 30. And at the same time, costs haven’t stood still. They’ve surged.
Yet over half of New Zealand’s household wealth (54%) is tied up in property. Here’s the tension: nearly 40% of Kiwis aged over 65 rely solely on NZ Super for their income.
Put simply, more than half our wealth is locked up in housing – and nearly half our retirees can’t access enough cash to live comfortably.
You can’t eat your house. Insurance, healthcare, the power bill – these costs don’t care what your house is worth. They have to be paid every month. Then there’s the rates bill every quarter. For a growing number of retirees, the cash simply isn’t there.
Owning a home is a great achievement. But owning a home in itself is not a retirement plan. A retirement built entirely on a valuation, with no cashflow behind it, is not the kind of retirement New Zealanders should settle for.
The problem is getting more acute. Around one in six Kiwis aged over 65 are still paying off a mortgage – once almost unheard of. Retirements are longer, and income drops sharply the day you stop working. It creates a perfect squeeze, right when financial resilience matters most.
Another risk that almost no one plans for is not realising the full value of your home when you need it most.
A recent US study found homeowners aged 80 selling their home received more than 5% less than middle-aged people selling a comparable home. On a $1.2 million home, that’s more than $60,000 lost – the equivalent of a full year of retirement spending, gone before you even move out.
Why does this happen? It can often be because homes age with their owners. When income is tight, maintenance gets deferred. Renovations don’t happen. Small issues snowball into expensive ones. Then, when a sale becomes urgent, it can fetch meaningfully less than you’d planned for.
In New Zealand, the scale of this issue is stark. We have an estimated $27 billion housing maintenance backlog. That’s not just a housing issue – it’s a retirement risk. For many older Kiwis, the asset they rely on most is unlikely to deliver what they expect.
None of this means property isn’t important. It absolutely is. A home remains one of the most important financial foundations a family can have. It just can’t be the only foundation.
The encouraging part of this story is that New Zealand has already started building the next one.
KiwiSaver didn’t exist 20 years ago. Today, it has more than 3.4 million members with more than $136 billion invested. That’s a remarkable shift in a single generation.
But the gap is still significant. The average KiwiSaver balance for someone aged 65 is around $78,000. Spread over a retirement that could last 20 or 30 years, that’s not a solution – it’s a supplement.
The trend is moving in the right direction. KiwiSaver is already closing the gap between NZ Super and what a comfortable retirement costs. It’s positive to see a renewed focus on strengthening KiwiSaver in recent policy discussions.
But the pace needs to accelerate. That means starting earlier, contributing more and staying consistent.
It may also mean thinking beyond property and KiwiSaver, building other savings and investments alongside them. Because in retirement, what matters isn’t your net worth on paper – it’s the income you can actually live on.
Not everyone needs to become an expert investor, but everyone needs more than one financial foundation.
New Zealand’s love affair with housing doesn’t need to end, but it does need a companion. Because a single asset – no matter how valuable it is – should not be expected to carry the full weight of a retirement on its own.
Disclaimer: This is intended to provide general information only. It does not take into account your investment needs or personal circumstances. It is not intended to be viewed as financial advice. You should not rely on any information in this communication in making financial decisions. Before making financial decisions you may wish to seek financial advice. Milford Funds Limited is the Issuer of the Milford KiwiSaver Plan and the Milford Investment Funds. Please read the KiwiSaver Plan Product Disclosure Statement and the Investment Funds Product Disclosure Statement.
