The Growing Economic Powerhouse: Seniors Driving New Zealand's Economy

New Zealand's population is ageing faster than anticipated, but rather than a burden, older Kiwis are emerging as a vital economic force. The latest NZIER Business of Ageing 2026 update, commissioned by the Office for Seniors, reveals that people aged 65 and over contribute nearly $34 billion annually to the economy through a combination of paid work, unpaid labour, taxes, and spending. This landmark report underscores how seniors are reshaping labour markets, boosting productivity, and sustaining demand in an era of demographic shift.

With over 900,000 Kiwis now over 65, their role extends beyond retirement stereotypes. Participation rates among 65-69 year olds have surged, reflecting healthier, longer lives and a desire to stay active. This isn't just about numbers; it's a structural change influencing everything from GDP growth to community cohesion.

Paid Work Contributions: $9 Billion from Employees and Self-Employed Seniors

One of the report's standout findings is the value of paid work by seniors. Currently, this stands at almost $9 billion per year, split between employee wages (around $4 billion) and self-employment income ($5 billion). Self-employment is particularly prominent, highlighting entrepreneurial spirit among older Kiwis who leverage experience in sectors like consulting, trades, and hospitality.

The number of employed seniors has doubled in recent decades, from about 100,000 in 2010 to over 217,000 in 2024. Regions like Auckland and Canterbury see high concentrations, while rural areas benefit from agriculture and tourism roles. This trend counters labour shortages, with seniors filling gaps in healthcare, retail, and professional services.

Unpaid Work: The $20 Billion Shadow Economy of Caregiving and Volunteering

Often overlooked, unpaid work by seniors adds over $20 billion annually. This includes caregiving for family (valued at carer wages), volunteering for charities, and household production like gardening or DIY repairs. The report uses minimum wage equivalents to monetise these efforts, revealing their scale rivals formal GDP contributions.

Women dominate caregiving, supporting NZ Super's universal design by freeing younger generations for paid roles. Volunteering alone supports community services worth billions, from food banks to sports coaching. As life expectancy rises, this 'silver dividend' grows, projected to hit $138 billion by 2074.

Tax Payments: Seniors' $13 Billion Fiscal Gift

Seniors pay more than $13 billion in taxes yearly, including income tax, GST, and property rates. Despite receiving NZ Super, their investments and pensions generate substantial revenue. The report notes this net positive, with tax take rising as asset values and spending increase.

This challenges myths of seniors as net drains, showing they fund public services. Projections see taxes climbing to $80 billion by 2074, underscoring intergenerational equity.

Consumer Spending: $55 Billion Boost to Businesses

Over-65s spend close to $55 billion annually on housing, food, transport, and leisure, driving demand in retail, healthcare, and tourism. Their preferences for quality goods and services support local economies, with spending per person rising from $25,100 in 2024 to $66,000 by 2074.

This 'grey pound' sustains SMEs, from cafes to home care providers. In regions like the Bay of Plenty, senior spending props up property and hospitality.

Future Projections: From $34 Billion Today to $176 Billion by 2071

By 2074, seniors' total contributions could reach $176 billion yearly, with employed 65+ doubling to 478,000 (11% of workforce). Paid earnings to $50 billion, unpaid to $138 billion, taxes $80 billion, spending $358 billion. Per capita value triples, driven by health improvements and policy support.

Challenges include skill mismatches and health barriers, but opportunities abound in flexible work.

How NZIER Calculated These Figures

The report uses Stats NZ projections, Household Expenditure Survey, Inland Revenue data, and wage equivalents for unpaid work. Consistent since 2010, it models real wage growth, participation rates, and consumption patterns. Sensitivity tests account for variables like migration.

This rigorous approach ensures reliability, updated for 2026 trends like post-COVID workforce shifts.

Regional Variations and Sector Impacts

Auckland seniors contribute most ($15b+), but per capita Southland leads due to agriculture. Healthcare and retail benefit most, with self-employment strong in construction. Rural areas gain from volunteering in conservation.

• Auckland: High spending on health/services.
• Canterbury: Tourism/agriculture boost.
• Otago: Retirement migration drives retail.

Challenges: Ageism, Health, and Policy Gaps

Despite gains, barriers persist: age discrimination, physical demands, and NZ Super 'pension trap'. 25% of seniors want more work but face bias. Health costs rise, but innovations like flexible hours help.

Solutions: Training, anti-ageism campaigns, super reforms.

Expert Views and Stakeholder Reactions

Minister Casey Costello: "Seniors strengthen our social fabric." NZIER's Todd Krieble: "Opportunity in 'young old'." Age Concern: Reinforces seniors' value. Business leaders eye silver economy potential.

Photo by Yulin Wang on Unsplash

Policy Recommendations and Future Outlook

Report urges flexible work laws, lifelong learning, health investments. Embrace 'business of ageing' for resilient economy. By 2040, seniors 25% population, their $100b+ input key to growth.

New Zealand can lead by valuing seniors' wisdom.