Of households on a low income, 4 in 10 also have the smallest safety-net of household wealth to fall back on if they lose a job or face unexpected costs, Stats NZ said today.
“Many households with a low income have little wealth behind them,” labour market and household statistics senior manager Jason Attewell said.
“But perhaps surprisingly, a low income doesn’t always mean low wealth. About 1 in 10 households with a low income is in the wealthiest group in society”.
“Income is important because it is the household’s main resource to meet day-to-day living costs. Wealth is important as it can be called on during times when people earn less, or face higher or unexpected costs,” Mr Attewell said.
“Looking at income and wealth together helps to better understand household financial security and how vulnerable some households may be to economic shocks.”
Of all households with the lowest incomes, 40 percent also have low wealth. Their level of wealth reflects how much they own, such as property and cash in the bank, and how much they owe, such as mortgage or credit card debt.
“However, for those with the lowest incomes, 9 percent were in the highest wealth bracket. This may reflect some households or families building-up a nest-egg over time, or whose members are retired or no longer working full time. Older people are more likely to have paid off their mortgage and have had their house increase in value over time” Mr Attewell said.
For analysis, income and wealth are divided into five different groups in the household net worth statistics. The highest group (quintile 5) represents the top 20 percent of households, by income or wealth, and the lowest has the lowest 20 percent.
|Wealth quintile||Percent of households|
|Age group (years)||Income quintile 1||2||3||4||5|