Transcript – Empowering women through KiwiSaver
[Text on screen: ANZ logo. Fiona Mackenzie MD Funds Management, ANZ]
Fiona: So today we're zooming in on a critical issue – the gender retirement gap.
[Text on screen: Jane Wrightson Retirement Commissioner]
Fiona: Why do women retire with on average, 25% less in their KiwiSaver savings, and what can we do to change that? So, Jane, what are the biggest contributors that you and your team see to that retirement savings gap?
Jane: None of this is rocket science when you think about it. It's time out of the workforce to care and commitments, either for children or for older people. It's the gender pay gap, which means we start off lower. And, because it's a percentage of salary, you know, and life shocks such as divorce, or ill health can also have a big impact on KiwiSaver balances as people struggle to, to fund whatever's happening in their life. The cumulative effect of this, is that women arrive at retirement with less and they live longer.
Fiona: Yes.
Jane: So, you know, this is where some mindfulness is really important.
Fiona: Yes. Absolutely agree.
Jane, if there was one thing, I'm going to limit you to one thing, that you could change about the system tomorrow, so I'm going to give you one choice but instant action, what would that change be?
Jane: Oh, just start now. If you're not contributing, start contributing. If you can, start on your first pay packet and just leave it, you know, if you can review your situation once a year, that's good.
Fiona: Yeah, make sure you're in the right fund, and try and challenge yourself to take enough risk, because if you're a 20 something female, you've got a beautiful, long investment horizon. Typically, once you get past that first home buyer stage, and take advantage of that and try and challenge yourself to take a little bit more risk if you can get comfortable with it.
Jane: That's exactly right. I think the financial education for women in particular needs mostly to focus around investment risk, because we don't tend to be quite as risky as our male counterparts. I've been on the balance fund for a very long time, and now I'm just going to young Jane “Very stupid idea that was”.
Fiona: Yes, yes. Because you see that, you can see the difference.
Jane: You know, just educating yourself and your risk tolerance is really important. And the younger you are, the more risk you can afford to take, not stupid risk.
Fiona: No no no. Absolutely. But I completely agree that it's one of your biggest advantages as any individual investor.
Many young people in Aotearoa, see KiwiSaver as a pathway to their first home. How can they balance that goal with also continuing to focus on setting themselves up for long term retirement?
Jane: Yeah again, great question. And I think everybody grapples with that when they deplete their KiwiSaver to buy their first home. And I'm one of the people, by the way, that says using KiwiSaver to buy your first home is a good thing because it sets you up on the housing ladder and that will give you better security in retirement. But, you know, so you have depleted your funds, you'll have a high mortgage all the rest of it. The moment you can start popping a little bit more away, just start, you know, maybe you decide to take a holiday for a year, I don't know, or a suspension for a year. It maybe you can contribute $10 a week on top of it. It doesn't really matter as long as you go. Right, I've got my asset thing sorted out. I still need to think about retirement saving, and I still need to think about compound interest because the earlier I keep saving and drip feeding it in, the better it is at the end.
Fiona: And it sounds like your advice in both of those instances is just do it. Just get started, you know, as soon as you can. And don't wait for that perfect moment.
Jane: There's never any perfect moment with money, is there? There just isn’t.
Fiona: No, it’s similar to having babies.
Jane: I was just going to say that.
Women have to be very conscious, that most of us have less financial resilience than men. You know, part of it’s systemic and part of it is absolutely upskilling ourselves to understand that this is the hill we have to climb.
Fiona: Yes. And really leaning into it at a personal level and figuring out what I can do for myself.
Jane: Absolutely.
Fiona: In addition to, you know, the systemic challenges that you talked about.
So my last question Jane, is if young women are feeling a bit of FOMO or fear of missing out because their friends seem to be further ahead with money, what advice do you give them to start building their own financial confidence and progress?
Jane: I think just start talking about it. If they're your friends, ask them how they did it. You know, women are not that great at talking about money. And we can get better at it. I think it's changing a bit now because there's so much activity online talking about it. Because talking about money is really, really important. There's not many magic secrets here, you know? And talking about failure is as good as anything else. Did they make mistakes? What can you learn from that? You know, if they’re talking about how they've got rich quick, you might want to listen to that quite hard because there's probably something wrong here.
Fiona: Little bit of critical thinking, yes.
Jane: And just don't forget about emergency savings that will bail you out of most things. If you've got some money set aside for the disasters that happen and they do, then that will tide you over and still keep you on a relatively okay financial even keel.
Fiona: That's phenomenal. Thank you for such a great conversation Jane, thank you for joining us. It's been great to chat.
Jane: My pleasure.
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