Women are not EARNING the same wage as their male counterparts. Statistics NZ says that as of May 2021, the gender PAY gap was 9.09% (based on median hourly wage and salary earnings). This gap equates to around $12,000 per year. (Source: www.stats.govt.nz)
The current gender SAVINGS GAP for ANZ KiwiSaver members as at 29 Feb 2020 is 17.71%. It was 17.88% in Feb 2019, and 18.1% in Feb 2017. (Source: ANZ Investments, March 2020). Women are ending up with less savings for their retirement.
Women also live longer in retirement – by an average of 2 years longer than men.
As many women have found out to their detriment, a man is not a financial plan. It is a devastating thing to find that out when you are entering the home straight and can see the retirement goal posts in the distance.
Sisters need to start doing it for themselves.
- We may earn less but we can save more
Women, generally speaking, are really good at being pragmatic and doubling down to make things happen.
Kiwis have many more options for the amounts that we can contribute to KiwiSaver now – 3%, 4%, 6%, 8% or 10% of your gross pay if you are earning an income with PAYE deducted. I would encourage you to see if you can manage without that extra 1% or 2% each payday. If you are self employed and contributing a dollar amount, what would an extra $10 a week or $20 a week look like? Try it and give it a go to move up one or 2 more clicks. You can always change it back if you have over-extended yourself.
- Watch the gap
Women are more likely to have time out of the workforce than men. We take time out to raise our families and often return to work part time. This means that we will have gaps in our retirement savings plans. Be aware of this and have a plan to try to catch up on your savings when you get through to the point that you do not have children who are quite so financially dependent.
- Take control of your KiwiSaver
Many people have no idea who their KiwiSaver fund manager is and which fund they are enrolled into. It is vitally important that you have a look at whether the asset allocation of the fund that you are invested in is suitable for you. If you are young or even middle aged, a default fund is not a good investment for you. You will be earning inflation plus 1%. If you have 20 – 40 years until retirement, you need to be doing better than that. Women also have a tendency to invest more conservatively than men. A conservative asset allocation is appropriate if you are planning to use your KiwiSaver to buy your first home in the next 5 years, or if you are aged 60 or older. Other than this, a conservative fund is not “age appropriate” for you!
Most major KiwiSaver fund providers have online assessments that you can work though to show you which asset allocation works best for you. Make some active choices to maximise the return on your money – you have worked hard for it and it needs to work hard in return.
- What do you want your retirement to look like?
Retirement doesn’t mean that you have to go cold turkey and cease work completely on the day of your 65th birthday. You may have the option to work fewer hours in your current job before the age of 65, and then work on for longer. You may be able to pick up part-time work in another field that you would love to be part of and work for as long as you choose to.
Women appreciate the social contacts from working and are also more likely to have meaningful hobbies and interests outside of their paid employment. Be very aware of avoiding “burnout” in your sixties by staying on in a high pressure working environment for too long. Ramp things back a bit and be kind to yourself. Would you rather earn $100,000 over 2 years and then have to retire and sleep for 3 months, or earn $25,000 a year over 8 years and have more time for interests and hobbies?
In my experience as a financial adviser, women tend to manage the transition into retirement very gracefully. Look creatively at what your options are and make decisions and choices that sit with how you want to retire.
I specialise in retirement planning, so please feel free to reach out if you would like to have a discussion about this.
Janet Natta is a financial adviser and director of Smart Money Advice, offering investment portfolio construction and management services to clients throughout NZ, as well as comprehensive financial planning advice to assist clients to build and protect wealth to achieve their dreams.
DISCLAIMER: The information contained in this article represents the views of the author. It is based on information believed but not warranted to be correct. Any views or information, whilst given in good faith, are given with an express disclaimer of responsibility and no right shall rise against any of the authors or Smart Money Advice or their employees either directly or indirectly out of any views, advice or information.