A simple decision could cost women a significant amount of money over their lifetime. According to Westpac, the gender savings gap has narrowed, but women still face a challenge when it comes to their KiwiSaver balances. While men contribute and save more, women often opt for less risky funds, which could result in a substantial financial loss over time.
The data reveals a clear disparity: men have higher average balances in all age groups, with the largest gap in the 30-39 age group. Westpac's general manager, Sarah Hearn, attributes this to the gender pay gap and time out of the workforce. However, women's preference for moderate or conservative funds is also a contributing factor.
The key issue lies in the risk factor. Higher-risk funds typically deliver higher returns over time. Morningstar data supports this, showing that aggressive funds have returned an average of 9.5% annually over 10 years, compared to 4.2% for conservative funds. Hearn warns that women's defensive strategies early in life could result in missing out on tens of thousands of dollars over the decades.
Westpac's earlier estimate highlights a potential gap of over $225,000 between conservative and growth funds over 30 years for a median earner. Hearn encourages women to consider their long-term savings goals and risk tolerance. She emphasizes the importance of discussing financial decisions, as men are generally more comfortable with numbers and money conversations.
To address this issue, Hearn urges women to review their KiwiSaver fund types and ensure they align with their risk appetite and time horizon. By taking on a bit more risk, women can potentially increase their savings and secure a more comfortable retirement. This is a crucial conversation to have, as it could significantly impact women's financial future.
