Parenthood, Gender Equity, and Retirement: What Couples Can Do

Why Is This Important?

Recent findings by Motu Research , a research commissioned by the Ministry of Women in 2018, highlight the significant challenges mothers face in their financial journeys. Many mothers experience lower lifetime earnings, which can be attributed to reduced working hours, lower wages, and career interruptions for caregiving. Even after returning to work, their earnings tend to grow more slowly than those of fathers. These persistent gaps in employment and income place mothers at a disadvantage compared to fathers, resulting in women typically accumulating less in retirement savings vehicles such as KiwiSaver or superannuation. Consequently, this disparity increases the risk of financial insecurity for women in later life.

Strategies for Couples to Promote Gender Equity in Retirement

1. Joint Retirement Planning

Couples are encouraged to approach retirement planning as a shared responsibility rather than focusing solely on individual accounts. This includes regularly reviewing both partners’ retirement balances and contributions, and considering ways to equalise contributions if one partner’s career is interrupted due to caregiving responsibilities.

2. Compensate for Career Breaks

When one partner, often the mother, takes time out of the workforce for childcare, the other partner can help mitigate the financial impact by making additional voluntary contributions to her retirement account. Sharing any bonuses or financial windfalls to boost her savings and setting up a joint investment account for long-term goals are also effective strategies.

3. Maximise KiwiSaver and Employer Contributions

It is important for couples to check whether employer contributions continue during periods of parental leave. If these contributions do not continue, making voluntary payments can help maintain savings momentum. Resuming regular contributions as soon as possible after returning to work is also crucial.

4. Consider Spousal Contributions

While “spousal contributions” are not standard practice in New Zealand, couples can still support each other’s retirement savings by transferring funds or investing jointly, similar to practices seen in other countries.

5. Protect Against Divorce or Separation

Understanding how retirement assets may be divided in the event of a relationship breakdown is essential. Keeping records of contributions and discussing expectations openly can help ensure both partners are protected.

6. Plan for Longevity and Health Costs

Because women tend to live longer, they may require more retirement savings to cover additional years and higher healthcare or aged care costs. Couples should factor in these considerations, including insurance needs, when planning for retirement.

7. Financial Literacy and Communication

Both partners should actively participate in financial decision-making and develop an understanding of retirement planning fundamentals. Regular “money meetings” are recommended to review progress and make necessary adjustments to plans.

8. Talk to Sumita Paul

Working with a Certified Financial Planner can provide valuable support by modelling different retirement scenarios, optimising contributions, and ensuring both partners are on track to achieve a secure retirement.