A bold move towards financial empowerment: Unlocking the potential for women's wealth.
Did you know that a simple decision regarding your KiwiSaver fund could impact your financial future by a staggering $200,000 or more? It's a shocking revelation, isn't it?
Westpac's recent insights highlight a persistent gender gap in KiwiSaver balances, with men contributing and saving more, despite women's longer average lifespans. The data shows a consistent pattern across all age groups, with the largest disparity among 30- to 39-year-olds, where men's average balance is a substantial $7,252 higher than women's.
But here's where it gets controversial: Westpac attributes part of this difference to the gender pay gap and time spent out of the workforce. However, they also point to women's tendency to opt for less risky funds. Men, on average, have a higher percentage of their balances invested in growth and high-growth funds, while women lean towards moderate or conservative options.
And this is the part most people miss: higher-risk funds have the potential to deliver significantly higher returns over time. Aggressive funds, according to Morningstar, have averaged a 9.5% annual return over the last decade, compared to just 4.2% for conservative funds.
Sarah Hearn, Westpac's general manager of product, sustainability, and marketing, warns that women adopting a more defensive strategy early on could miss out on tens of thousands of dollars over their lifetime. Westpac estimates that the difference in outcomes between conservative and growth funds over 30 years could be as high as $225,000 for a median earner contributing 6% of their income.
"Historically, women have favored conservative fund choices," Hearn explains. "But if they're saving for the long term, at least 13 years, and can handle larger fluctuations in their balance, I'd encourage them to reconsider their fund type."
Hearn urges women to discuss their financial decisions more openly. "Men are generally more comfortable talking about money and numbers," she observes. "We have a great opportunity to change that and have more conversations about our KiwiSaver balances, returns, and fund types."
She emphasizes the importance of ensuring your KiwiSaver fund aligns with your risk appetite and timeframe. "Balances can fluctuate, and there's volatility, but this is a long-term game. Retirement is a couple of decades away for most of us, so now is the time to take on a bit more risk and make our money work harder."
So, are you ready to take control of your financial future? It's time to have those conversations and make informed decisions. Your future self will thank you!
