"I think the superannuation thing is a distraction from what we're dealing with over the next 10 years... The reality is that if our GDP grows strongly over the next 10 or 15 years there will be a lot more choices for those sorts of issues for our older generations further out."She'll be right, sez Joyce. The reality is that NZ's GDP has not been growing strongly over the last ten or 15 years. And, with a global meltdown or two on the horizon, you'd have to drink an awful lot of spiked Jungle Juice to believe that NZ's GDP is going to grow strongly over the next decade or two.
Last year, David Chaston at interest.co.nz looked at the intergenerational wealth transfer of baby boomer retirement:
Basically, someone who finished high school with the School Certificate qualification in 1962 will be aged 65 in 2011, and eligible for NZ Super.It gets worse. Most baby boomers were single income households. It wasn't until the 1980s that two income households became the norm. Chances are that statistically average taxpayer from 1962 was married, supporting a family with that sole income. Whether they remained married or separated, the taxpayer is on the hook for two pensions today. In that scenario, baby boomers will squeeze way more out of the government in transfers than they ever paid in.
Statistics NZ has relevant data of earnings and taxes from 1962 and we can use that data to track the earnings in that working life - and from that data determine the taxes paid over that period.
Essentially, our statistically average person will have earned about NZ$1.4 million and paid about NZ$342,000 in tax, taking home a pay packet of a little over NZ$1 million over those 50 years.
Converting these raw earnings and taxes to 2011 dollars, they earned NZ$2.7 million, paid NZ$620,000 in taxes, and had take-home pay of a bit more than NZ$2 million.
However, for the next 20 years of retirement, they will claim in 2011 dollars NZ Super to the value of NZ$544,000 - or almost 88% of all the taxes they have ever paid.
And, if that doesn't take the sparkle out Joyce's Jungle Juice, perhaps Elizabeth Warren's doom and gloom will dilute Joyce's happy babbling: