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By 2026 it has been estimated that people aged 65 and over will make up approximately 20% of the population of New Zealand (Statistics New Zealand, 2005). These demographic changes, which reflect international trends, call for reconsideration of the conventional ways of understanding decrements in mental health and cognitive functioning as part of an inevitable decline in older age. In response to increases in life expectancy and rapid increase in the older population, social policy has shifted toward a focus on 'positive ageing' and an interest in addressing the factors that will affect wellbeing in older age. One important aspect of wellbeing is mental health. Mental illnesses, including anxiety and depression as well as dementia and psychiatric disorders are widespread among the elderly in OECD countries and can lead to entry into institutional care (Oxley, 2009). Alarmingly, of 10 OECD countries, New Zealand has been shown to be second only to the USA in lifetime prevalence of mental health disorders (Chapple & Ladaique, 2009). From a population health perspective, two important aspects of people's social lives have been shown to be reliably related to their mental health are economic hardship (Wilkinson, 2005) or poverty (Belle, 1990) and social support (Berkman, 2000) or loneliness (Cornwell & Waite, 2009. The social position of older people in our societies puts them at risk for both poorer economic well-being and lower social support or more loneliness, compared to the rest of the population. Thus, experiences of old age include risk of poorer mental health, lower social support, and increased poverty and these are not experienced separately by elders, but have intertwined effects which we will explore in this paper. Poverty and living standards It is expected that older people who have left the workforce will be over represented in the lower parts of income distribution in western countries (Zaidi, 2008) . Thus, older people are one of the groups seen as particularly vulnerable to poverty. In particular, the economic differences of working life continue to influence life-styles and activities in old age (Vincent, 1995) and those with lower incomes, especially women or indigenous peoples in colonised countries, carry the health vulnerability of lower socioeconomic status (SES) into retirement and older age (Walker, 2009). Chandola, Ferrie, Sacker, & Marmot, (2007) showed that, in the UK, the economic inequalities of working life and their effects on mental health are amplified for people in early retirement. Other research has shown the same and sometimes worsening effects of lower SES on health across older age (e.g., Arber & Ginn, 1995; Johnson & Falkingham, 1992; Walker, 1993). Marmot (2004) has described the effects of deprivation in affluent societies as different from the starvation of absolute poverty, but nevertheless, as having observable effects on health and mortality. The basic approach to assessing poverty and those at risk is to measure income. This assessment depends on where the poverty line is set; 50% or 60% of the median income for the overall population has become the accepted way of defining financial poverty in European countries (Zaidi, 2008). In New Zealand, universal superannuation from the age of 65 provides a floor above the 50% threshold. Thus, comparing rates of poverty with OECD countries using this threshold gives New Zealand the best overall ranking. Some individuals may even improve their income when they reach 65. However, if an individual has no savings and no home ownership they may be living in hardship. Using the 60% threshold (as used by the European Union) in the year to June 2004, 6.4 percent of the older population (above 65) in New Zealand, were assessed as living below the poverty line. The proportion of older people living below this threshold has been as high as 8% since 1988, but stabilised at 6.4 percent from 2001 (Ministry of Social Development, 2007). …
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