As of 2023 women typically have about 25% less money in their KiwiSaver accounts than men*. We often hear about the gender pay gap, which is the difference between what men and women earn doing the exact same job, currently around 9%. But what is alarming, is the KiwiSaver balance inequities are outpacing this gap!
Why is this happening?
There are a few reasons why women end up with less in their KiwiSaver:
- Women often earn less: On average, women’s paychecks are smaller than men’s. Less money earned means less goes into KiwiSaver.
- Taking breaks from work: Many women take unpaid time off to care for kids or older family members. During these breaks, they might not be contributing to their KiwiSaver.
- Working part-time: More women work part-time jobs, often to balance work and family. This can mean smaller KiwiSaver contributions.
- Playing it safe with investments: Often people who opt for conservative funds have lower balances. This can happen because they don’t fully understand the basics of investing and play it safe. Since women typically have lower KiwiSaver balances, they’re more likely to pick less risky funds, which may lead to slower growth over time.
- Less confident about money matters: Women may feel less sure about making financial decisions, which can affect how they manage their KiwiSaver.
Why should we worry?
Women generally live longer than men. Today, 80% of 65-year-olds will live until they are 90 years for men and 92 years for women. So, your KiwiSaver possibly needs to last 25 years if you are a man and 27 years if you are a woman.
Today, you will receive $31,547 a year (before tax) from NZ Super. This plus whatever you have saved for in your KiwiSaver is what you will be living off come retirement. Do you have enough to live your best life in retirement? You can do some basic calculations here to see what your future could look like.
What can you do about it?
- Come and talk to us at Cole Murray: We are Financial Advisers, and we can help you make a plan that fits your situation.
- Increase your contributions: If you can, try to contribute more than the minimum 3%. Even small increases can make a big difference over time.
- Check your fund type: Depending on how old you are and your appetite for risk can help you decide on what fund type (Conservative, Balanced, Growth, Aggressive) is best for you. Typically, a higher-risk fund might be right for you if you have a long time before you retire**. Remember, higher risk can potentially mean higher returns over the long term.
- Keep contributing during career breaks: If you take time off work, try to keep making contributions, if possible. Even if it’s a small amount, everything helps.
- Contribute enough to receive the government contribution (if eligible): Every $1 you contribute the government will give you 50cents up to $521.43 per year.
- Educate yourself: Learn more about KiwiSaver and investing. This is where Cole Murray can help. We are experts in this space, and we can help you gain the confidence to make the right decisions for you and your situation.
- Review your KiwiSaver regularly: Everyone’s situation changes all the time. Our KiwiSaver Advisers like to review your KiwiSaver on a regular basis. This ensures you can stay on track with your savings goals.
- Negotiate your salary: Don’t be afraid to ask for a raise or negotiate your starting salary. Higher pay means more goes into your KiwiSaver.
It’s not too late!
Don ‘t worry, it’s never too late to start improving your KiwiSaver situation. By taking these steps, and having a Financial Adviser by your side, you can begin to close the gap. Give us a call and we can help set you up for the retirement you hope for.
