Old age wealth decumulation in New Zealand

Abstract

This paper is a discussion about, and analysis of, old age wealth decumulation in New Zealand. The way that people acquire and dispose of wealth in New Zealand is very closely related to their age and stage of life, and as people enter into their elder years their income tends to slowly decrease as hours of work are reduced, and their expenditure slowly begins to increase as health and other support needs increase. In New Zealand the government plays a significant role in funding elder care, and has a series of levers which indirectly manage the rate at which wealth is decumulated. The purpose of this paper is to examine and critique some of the key levers that have been set by legislation and government policy that manage wealth decumulation in old age.

This paper argues that there is a tension that needs to be managed by the legislative and policy settings for wealth decumulation, which is that there is a social benefit in helping elderly people retain financial independence for as long as possible, but that there is also a benefit to the state if people pay for as much of their own care as possible.