Retirement planning for women

Retirement Commissioner Diane Maxwell

By Retirement Commissioner Diane Maxwell

Women reach retirement with a lot less money than men but a little planning can make a big difference.

There is good and bad news when it comes to women as they get older: we live longer than men, but reach retirement with a lot less money.

There are all kinds of reasons for that, but take heart, because that means there are also all kinds of solutions.

In a nutshell, women generally earn less than men, often when doing the same job; we take time out to have children so spend fewer years working; we are more likely to be lone parents and suffer more severe financial consequences when relationships end.

There’s a phrase that when women find themselves in a hole we plant flowers in it, while men dig. So when money is tight, women make cuts instead of increasing what is coming in, men look for ways to improve their income.

Women tend to take fewer risks, partly because we are less confident: in financial surveys we are far more likely than men to answer ‘don’t know’. As job applicants, a man will apply for a job if he has about 40% of the experience needed, a woman won’t unless she has 80%.

And I’ve met some women who invoke the universe, relying on it to provide for them instead of doing what the men do and sitting down with a calculator to take a cold, hard look at what is in front of them.

This matters so much because women live, on average, into their 80s, five years longer than men. Our children will live into their 90s and many people born now will live past 100.

We’re not just living longer, but stay healthier and want to do more, so 65 today is very different from 50 years ago and it will be different again in 50 years’ time.

You may have daughters, grand-daughters or younger female relatives and are worried about how they will manage financially with all that lies ahead.

Happily, there are ideas you can pass on and most of them are plain common sense.

Money makes money

There’s a thing called compound interest: it means money makes money. You earn interest on your money and as it grows, you earn interest on the interest. The earlier you start saving the better, but even in retirement your savings should be working for you.

If you are signing to borrow money and you don’t understand how much it is going to cost, or the deal, or the interest rate, then stop the sales person and ask them to go through it again, and again, until you are completely clear. That’s their job and that’s what they are paid for.

Falling in love: relationship property laws. It doesn’t feel very romantic to thrust a relationship property agreement under someone’s nose but if you own your house and meet a new partner then you need to get them to sign an agreement, so you can protect yourself.

Don’t think everyone else has got it sussed: it is easy to see the neighbours with a new car and assume they have their money sorted, but the car might just be a giant loan on wheels.

Don’t worry about what anyone else is doing but focus on what you can do: save little and long. Buying lots of little things adds up to spending lots of money. In the same way, lots of little savings build up to a big chunk for your future.

So tell your daughters to put just a bit away, once a month, and they’ll be stunned by the results, thanks to the beauty of compound interest.

And remind them that in the future they will still be the same person. Pay it forward: buy themselves something in the future, a glass of wine for example, so when they retire they can raise a glass to their younger self – and to you - and say ‘thanks for that’.

Editor's note: Views expressed by contributors are not necessarily those of the Office for Seniors

More information

Sorted has great comprehensive resources for financial planning to help you prepare for retirement and for when you are retired.

Sorted’s guide to living in retirement

Sorted’s guide to retirement planning


This video from the Commission for Financial Capability will help you understand KiwiSaver – how you invest and what to do with your investment when you turn 65.

Financial capability

The Commission for Financial Capability is an autonomous crown entity which builds financial capability to equip the retirees of today and tomorrow. We asked them to explain what financial capability is and why we should all care about it.

A quick guide to financial capability