Putting the family’s financial needs continuously ahead of their own can have a costly impact on a woman’s retirement savings, according to Glenys Wilson, senior associate at investment specialist and KiwiSaver provider Mercer.
Wilson, who has spent the last 25 years helping people get ready for retirement, says while many women face genuine challenges like lower incomes, less time spent in the paid workforce and the need to make savings last longer, there are some simple but important things they can do to get retirement ready.
While men often overestimate their ability to create a sound financial plan, women usually underestimate themselves. However, when women revise their mindset and realise they’ve simply got a new skill to learn, things change.
“Once they’ve got an understanding of the basics of saving and investing, most women become confident, not to mention visibly relieved, about making decisions on their financial future,” she said.
Find a target.
Working out how much money could be required to fund their retirement is often a confronting exercise for Wilson’s seminar clients, with many underestimating how much money they’ll need.
“People tend to overestimate what they will get from New Zealand Superannuation payments. While some people decide they could manage on around $315-440 per week, most of us want a few more luxuries in later life.”
Mercer’s retirement income simulator has been designed to help identify the total amount of money needed, based on current age, income and savings, and how long that amount is likely to last over a lifetime.
Fund the gap.
Even though many women now have KiwiSaver, there’s still usually a significant difference between the amount that could be reasonably saved before retirement and what will actually be needed to fund the years ahead.
“Saving alone is unlikely to get you to your goal. Rather, it’s likely to be a combination of things like increasing retirement contributions, the effects of compounding and deciding on investment vehicles that are right for your timeframes and investment style,” says Wilson.
Any investment decision should be based on an investor’s personal circumstances.
In New Zealand, an appropriately authorised Financial Adviser can help create and implement long-term financial plans designed to achieve specific retirement savings goals.
Wilson says many women put family first to their detriment, treating retirement savings as something that can wait.
“Just as we’re told in airline safety briefings to put our oxygen masks on first before helping others, when it comes to retirement women need to start putting money aside for their retirement and develop a retirement savings plan, the sooner the better.”
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