A single financial choice could potentially cost women a staggering $200,000! This eye-opening revelation comes from a recent analysis of KiwiSaver, New Zealand's retirement savings scheme. But here's the twist: it's not just about saving more; it's about taking risks.
According to Westpac, the gender gap in KiwiSaver balances has narrowed, but men still lead in contributions and savings, even though women typically live longer. The data reveals that men have higher average balances across all age groups above 18. The most significant disparity? Men in their 30s have an average balance of $28,992, while women in the same age group trail behind with $21,740.
So, what's driving this gap? Westpac's Sarah Hearn points to the gender pay gap and career breaks as partial explanations. But here's where it gets controversial: women tend to favor less risky investment funds.
The numbers don't lie: 37% of men's KiwiSaver balances are in growth and high-growth funds, compared to 32% for women, who lean towards moderate or conservative funds. And this is the part most people miss: higher-risk funds historically yield higher returns. Morningstar data shows aggressive funds averaging 9.5% annual returns over a decade, crushing the 4.2% of conservative funds.
Hearn warns that women's defensive investment strategies early on could result in a substantial loss of potential earnings. Westpac's estimate? A whopping $225,000 difference in savings over 30 years between conservative and growth funds for a median earner.
Hearn encourages women to reconsider their fund choices, especially if they're in it for the long haul. She suggests that women should discuss their financial decisions more openly, challenging the stereotype that men are more comfortable talking about money.
The key takeaway? Women should evaluate their KiwiSaver funds, ensuring they align with their risk tolerance and long-term goals. It's about embracing volatility for the chance to significantly boost retirement savings. But is this strategy too risky for some? Share your thoughts in the comments!
