Q I will be going on maternity leave when our first child arrives in June. If we can manage on one income, I will take a year off. My KiwiSaver is on $28,000 and my partner's is on $33,600 (he earns more than me and contributes 6 per cent). We bought our home using KiwiSaver five years ago so these are our retirement savings. Should my partner put his KiwiSaver on hold while I'm not working? He takes care of the financial stuff and is worried about rising interest rates and the effect it will have on our mortgage repayments.
A Experiencing a drop in income is never easy, and with the current cost of living crisis and rising interest rates this could be particularly challenging time for you.
Do you have any other savings? KiwiSaver is very useful, but it is a long term savings vehicle. You should also have some shorter term savings that you can access at any time.
You should address the disparity in savings between you — your partner has 20 per cent more in his KiwiSaver than you do.
Have you heard about the gender savings gap? Despite years of work, many women lag behind their male peers in retirement savings.
Stats NZ recently reported that the median man's KiwiSaver balance is 25 per cent larger than the median woman's.
The reason for the disparity is partly because many women take time off to raise children. This results in less money saved, and perhaps also fewer opportunities to progress in their career and go up the salary scale.
On average, women are also paid less than their male peers — the gap in this country is currently around 9 per cent. Efforts are being made to close the gap, but there is still a long way to go.
Another issue is that women are inclined to take less risk in their investment strategies than men — and with a longer term savings plan like KiwiSaver this could make a big difference to their final savings total.
Some women also believe that being smart with money is somehow unfeminine. Those same women may have grown up expecting that one day they will meet a "knight in shining armour" who will provide them with financial security. This idea is a handbrake to financial independence. It also puts women in a vulnerable situation, making it difficult to hold their own if things go wrong in the relationship.
There is no reason why women can't be as financially savvy as men. A number of studies have shown that women are more financially responsible and make better money managers.
You can improve your financial confidence by taking an interest in your KiwiSaver — read up about your fund online. Go through your bank statements and nail down your budget. Talk to your friends about how they manage financially and share money saving ideas with them. Once you take the topic of money out of the "too hard basket" you will be surprised how interesting it can be.
When you go on maternity leave your partner could drop his KiwiSaver contributions to 3 per cent and put any surplus income into an emergency savings fund. He could also contribute $20 per week to your KiwiSaver — enough for you to get the full government top up. Or you can arrange for KiwiSaver payments to be deducted from your parental leave payments (currently the maximum is $621.76 a week before tax for up to 26 weeks).
Down the track, make it your goal to build up your KiwiSaver to equal your partner's. It will do wonders for your money confidence.
- •Shelley Hanna is the communications manager with Peak Portfolio Management Ltd which is a Financial Advice Provider licensed by the Financial Markets Authority. Disclosure information is available at www.peak.net.nz or call 06 8703838. The information provided in this article is of a general nature and should not be relied on as a recommendation to invest in a financial product. Send your KiwiSaver questions to firstname.lastname@example.org