A bold statement: Women's financial choices could be costing them dearly, with a potential loss of over $200,000! But here's the catch: it's not just about the numbers. It's a complex web of societal norms, risk appetite, and long-term planning.
Westpac's recent analysis reveals an intriguing gender gap in KiwiSaver balances. Despite narrowing, the gap persists, with men contributing and saving more, even though women tend to live longer. The biggest disparity is seen in the 30-39 age group, where men's average balance is a whopping $7,252 higher than women's.
So, what's the deal? Westpac's Sarah Hearn points to the gender pay gap and time out of the workforce as factors. But there's more to it. Women, it seems, are more inclined towards less risky funds. While men have 37% of their balances in growth and high-growth funds, women opt for moderate or conservative funds, with only 32% in higher-risk categories.
And this is where it gets controversial: higher-risk funds promise higher returns over time. Data from Morningstar shows aggressive funds delivering an average annual return of 9.5% over a decade, compared to just 4.2% for conservative funds.
Hearn warns that women's defensive strategies could cost them tens of thousands of dollars over the long term. Westpac estimates that the difference in outcomes between conservative and growth funds over 30 years could be a staggering $225,000 for a median earner contributing 6% of their income.
But here's the part most people miss: it's not just about the numbers. It's about comfort and risk appetite. Hearn encourages women to consider their fund type, especially if they're saving for the long haul and can handle the ups and downs.
She emphasizes the importance of financial conversations, noting that men are generally more comfortable discussing money. She believes there's an opportunity for women to talk more openly about their KiwiSaver balances, returns, and fund types.
So, what's your take? Are women missing out on potential gains by opting for conservative funds? Or is the risk too great? We'd love to hear your thoughts in the comments. This is a complex issue, and your insights could help shape the financial future of many.
