Women, beware the $200,000 gap: Why your KiwiSaver strategy matters
The gender gap in KiwiSaver balances is narrowing, but women still face a significant financial challenge. According to Westpac, while the gap has shrunk from 17% in 2020 to 14% in 2025, men are saving and investing more, even though women tend to live longer. This disparity could cost women a staggering $200,000 over their lifetimes.
The issue lies in investment choices. Westpac's data reveals that men have higher average balances in all age groups over 18, with the largest gap in the 30-39 age group. Men invest 37% of their balances in growth and high-growth funds, compared to 32% for women, who prefer moderate or conservative funds. This conservative approach could be detrimental in the long run.
Sarah Hearn, Westpac's general manager of product, sustainability, and marketing, explains that the gender pay gap and time out of the workforce contribute to this disparity. However, she also highlights a crucial point: women's tendency to choose less risky funds might lead to missing out on substantial returns. Aggressive funds, as evidenced by Morningstar data, have delivered an average annual return of 9.5% over 10 years, significantly outperforming conservative funds at 4.2%.
The consequences of this conservative strategy are alarming. Hearn warns that women who adopt a defensive approach early in life might lose out on tens of thousands of dollars over decades. Westpac's estimates are even more startling, suggesting a potential gap of over $225,000 between conservative and growth fund investors over 30 years for a median earner.
So, what's the solution? Hearn encourages women to reassess their fund choices, especially if they're saving for the long term. She emphasizes the importance of aligning investment strategies with risk tolerance and time horizons. By taking on a bit more risk, women can potentially boost their returns and secure a more comfortable retirement.
But it's not just about numbers. Hearn also stresses the need for open conversations about money. She notes that men are generally more comfortable discussing financial matters, and women should feel empowered to engage in these conversations. By sharing their KiwiSaver balances, returns, and fund types, women can make informed decisions and potentially close the gap.
In conclusion, the $200,000 gap is a stark reminder that women's financial strategies need a boost. By embracing a more aggressive investment approach and fostering open dialogue about money, women can take control of their financial future and ensure they're not leaving money on the table.
