The chances of falling on hard times may be greater than many think.

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A joint study by Deloitte and Victoria University's School of Government has found one in nine New Zealanders will experience a significant fall in income in any given year.

Lower to middle income earners are even more vulnerable, with the odds dropping to one in six.

Report co-author and Deloitte partner Dave Farrelly said the odds of being caught in serious financial strife surprised him.

"When you start to look at the impact income can have, and your ability to have money set aside for that rainy day, one in nine is significant."

Karen West experienced the struggles first hand when an unsuccessful operation to remove a tumour on her spine last year left her paralysed from the chest down and unable to work.

While she had some savings to draw on, to help pay her rent and day-to-day bills until her ACC claim was accepted, she said her change in circumstances blindsided her.

It was something she "definitely hadn't" seen coming. "I guess none of us know what's round the corner, and we do tend to take our health for granted until it's taken away from you."

Robert Slotemaker from Nelson also struggled, after being made redundant at 57.

"I had no expectation of losing that job within six to seven years which would have taken me through to retirement," Mr Slotemaker said.

"To suddenly be hit at my stage of life, potentially without a job, it was quite frightening really."

He found another job, but at only half his previous salary.

"My retirement plans are now uncertain."

The support of family and friends is often vital to people who have fallen on hard times, as Karen West found.

"I had friends who brought meals round, and took me out if I needed to go somewhere," she said.

"And family was obviously there all the time. Jake [son] was amazing, and my sister. You just wouldn't be able to cope without that family and friends support. I know I couldn't."

Report co-author Toby Moore, a Victoria University research fellow, said many people lacked the ability to bounce back from a setback.

Struggle from pay to pay

He said they struggled from pay to pay, and managed any shortfalls by postponing visits to the doctor or dentist.

That put them in a even poorer position to deal with serious disruption down the line.

"There is a real concern there with peoples' coping mechanisms leading to further problems."

The report also found heavily indebted households are vulnerable to future rises in interest rates.

The rise in so-called 'precarious work', which in general is poorly paid with few and sporadic hours, means incomes are likely to become more unstable.

Government support is crucial to keep people afloat.

But Vanessa Cole, a coordinator for Auckland Action Against Poverty, said the system focuses on keeping a lid on costs rather than help people and their families get back on their feet.

"People who have never really witnessed the reality of poverty in Aotearoa and are experiencing it for the first time; that toxic culture of Work and Income, which often puts these people in immense distress.

"We have had people in absolute shock over the way in which Work and Income treat people after spending their whole life never having to navigate that system."

The report recommends the government reintroduce child credits and consider income top-ups to improve households' resilience to unexpected shocks.