Five ways we can close the gender retirement funding gap

While I was walking through the airport recently, a Time magazine cover shouting “This baby could live to 142 years" caught my eye. As a mother of three young girls it was a stark reminder of the challenges my daughters will face in building a financial future.

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They might not reach 142 but there are pretty short odds they will live to an older age than I will. And while retirement ages are inching up there's still a good chance they could be retired for as long as they work. Or even longer.

" The reality is that women are coming from behind in saving for their retirements."
Ana-Marie Lockyer, General Manager ANZ Wealth Products and Marketing in New Zealand

Increasing life expectancies are cause for celebration but funding longer and longer retirements will pose challenges for us all – particularly for women. Luckily, there are actions we can take to close the gap.


The reality is women are coming from behind in saving for their retirements. On average, women live longer and retire earlier than men, meaning their retirement savings need to stretch further.

Despite this, women's retirement savings lag men's by a considerable degree. In New Zealand, average balances for female members of our KiwiSaver Schemes are almost 28 per cent lower than men. A year ago, the gap between men and women's balances was 26.5 per cent - so the gap has widened. In the more mature superannuation market of Australia this gap is more like 32 per cent based on super account balances.

It's estimated New Zealand women, on average, are likely to retire with $60,000 less than men. The story is no different across the ditch, where, according to the Association for Superannuation Funds of Australia, the gender gap in superannuation balances at retirement is fast approaching $200,000.

This is significantly less money, particularly when you consider it may need to be stretched across a longer retirement. There is little to suggest that women will close this gap – in fact, it is likely to continue to widen over time, leaving a number of women short of funding for a comfortable retirement lifestyle.

This is due to a number of factors including the fact that, relative to men, women have lower average earning power over their life and contributions are a percentage of pay. Women also tend to be more risk-averse and therefore are more likely to invest in conservative funds with lower returns.

Women also take more contributions holidays. An estimated 85 per cent of women take time out of the workforce for lifestyle choices, to, for example, raise a family.

Doing the math reveals the problem. I did a quick comparison between my working life and that of my brother as an example. I worked out I would likely be working for 29 years and not working (to care for family and hopefully enjoy my retirement) for about 29 years.

By contrast, my brother potentially has 42 years in the workforce with around 22 years in retirement. So earnings power aside my working / retirement ratio is 1:1 compared to his which is closer to 2:1. Not that I would change a thing about my life but I know this ratio contributes to the gap. Everyone's personal circumstances are different and I know many women who face a similar situation.


Australian and New Zealand superannuation schemes rely on regular contributions, generally through the workplace, and the benefits of compounding interest over time. A gap from contributing can be a major setback for women, particularly as many women retire earlier than men, often to care for elderly parents or relatives.

But we know the risk and there are things we can do about it. Here's five things we can start with.

Start early: the earlier you start saving, the better off you will be as you benefit from compounding investment returns over time.

Front end loading: making bigger contributions in your 20s can help compensate for career breaks you might take in your 30s or 40s.

Lump sums: if you can't manage regular contributions, consider making lump-sum contributions when you have some spare cash.

Catch-up contributions: you can increase your regular contributions when you return to work to catch up.

Choose the right fund: consider moving your money to a higher growth fund.

Underlying this analysis is the point no two women are alike. Not all these solutions will be right for everyone. Take the time to plan. The key thing to remember is there are things you can do to close the gender gap in retirement savings. Roll on that 142nd birthday!

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As you can see this is a major challenge in NZ and KiwiSaver has only been going less than eight years. Not that it makes it any better but Australia, a more mature superannuation market with higher savings rates, faces an even bigger challenge as it’s retirement gap is even higher. The two nations face many common challenges, this is one of them.

This infographic is also available in pdf format. Sources: OnePath “Your Super Future” calculator and KiwiSaver.

Ana-Marie Lockyer is the General Manager ANZ Wealth Products and Marketing in New Zealand.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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