Personal Finance

Women are more likely than men to struggle financially in retirement | What to do now

NimbleFins digs into recent studies showing pension inequality for women. How does this affect you?

WOMEN in the UK will struggle more than men in retirement, two studies have found.

Retired men have 70% more to live on than women, new statistics reveal in one of a number of discrepancies.

Females will live on just £26 of pension income a day compared to men living on £44 according to campaigners Women Against State Pension Inequality (WASPI).

Analysing latest figures from the Department for Work and Pensions and private wealth statistics from the Office of National Statistics, WASPI found men aged between 65 and 74 have £182,700 saved in private pensions. This compared to just £25,000 for women of the same age.

This works out at just £2.50 a day for women compared to £20.20 for men according to Aviva's pension calculator.

Meanwhile men receive an average of £170.50 a week of State Pension compared to £164.74 for women, according to DWP.

In a separate worrying study HSBC UK found one in four women over the age of 35 have no retirement savings and 56 percent have only saved up to £1,000 for their pension pot. This is in spite of retired females saying they need up to £30,000 a year to fund their lifestyle.

HSBC questioned more than 1,000 people already retired and 2,600 workers in January.

More than half (52 percent) of the women questioned by HSBC said they expected to worry about their finances in retirement. One in 10 of those already retired said they couldn't afford household bills.

Emma Chee, of HSBC UK, said: “Nearly half of retired women we surveyed reported that the pandemic had negatively affected their retirement savings, and a third are relying on their partner’s pension.”

There are a number of reasons for the differences. The gender pay gap means women saving the same percentage of their income towards their pensions are saving less than men. Women are more likely to take time off work for caring responsibilities and are more likely to work part time. Part time work also puts a strain on finances in the present with less take-home pay meaning less disposable income to invest or save.

The situation for retired women has been made worse by the Government's decision to increase the pension age from 60 to 66. Some women born in the 1950s were given just one year's notice of the change and many were unaware because the Department for Work and Pensions should have told those affected 28 months earlier than they did, the Parliamentary and Health Service Ombudsman (PHSO) ruled.

WASPI chair and finance director Angela Madden said: “These new figures show why women were so devastated by the DWP’s maladministration. The lion’s share of that paltry £26 per day comes from the State Pension. If women had known they were going to retire up to six years later than they thought, they would have been able to plan better."

WASPI is demanding up to £20,000 compensation for every woman affected, adding that almost 250,000 women will have died waiting for the compensation by the end of this year.

How to boost retirement savings

1. Maximise pension contributions

Add as much as you can afford into your workplace pension. Some employers match what you put in up to a certain limit, so it's worth making the most of that offer if possible. The money you save into your workplace pension is taken from your salary at source, so it is not hit by income tax making it the best way to save.

2. Check your National Insurance contributions

If you've had a career break there may be a gap in your NI contributions which could mean you are not entitled to the full State Pension. You can make voluntary contributions to catch up. You can check your State Pension forecast here.

3. Start saving

Even if it's small amounts, the more you save now, the more you'll have in the future. Cutting that daily coffee could save you £75 a month or more than £900 a year.

4. Invest

Women statistically are more dubious of investing in stocks and shares than men and this creates an imbalance in savings. With interest rates so low, it's a good time to try investing rather than saving. A stocks and shares ISA, or using an app like MoneyBox is a good starting point for beginners and you don't have to invest much. Experts advise using the first few months to invest £20-£50 in shares to get the hang of it without feeling any risk. Then when you are more comfortable with the process do some research and look for some more well-thought out purchases.

Dame Helena Morrissey, financier and campaigner and former head of personal investing at Legal & General Investment Management, told Good Housekeeping: "When you invest, look to lock your money away for a minimum of five years, but check your portfolio at least once a year to make sure it is still working for you."

5. Change retirement plans

If you're nearing retirement age and worried, perhaps you might want to continue working a few more years to feel more financially stable. Some people switch to a semi-retirement and work part time. If putting off retirement, tell your pension provider and they may be able to advise what best to do with your money.

Erin Yurday

Erin Yurday is the Founder and Editor of NimbleFins. Prior to NimbleFins, she worked as an investment professional and as the finance expert in Stanford University's Graduate School of Business case writing team. Read more on LinkedIn.


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