Why women should worry about pensions

When it comes to pensions, women have a lot more to worry about than men. Why? Because despite the fact that, on average, we live longer than men, we are saving far less for our retirement. The result isn't good: a woman who retires this year will do so on an average income of £12,000 (including basic state pension). A man will get £19,500.

This should come as no great surprise. Women tend to work outside the home for fewer years than men, and their wages also tend to be lower. But that doesn't stop it being a problem. So what should women do to bump up the value of their pensions and avoid a miserable old age?

If you are still a long way off retirement you have time. Get a pension forecast from Direct.gov.uk. This will tell you how much money you can expect to get from the state when you retire. Then start saving as much as possible you need to strike a balance between consuming now and saving to consume later and do it as cheaply as possible.

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Don't stop saving just because you take a career break your children won't thank you later if having them means you stop saving for yourself. According to Aviva, someone who usually saves £200 a month into a pension would take £20,000 off the value of their pension pot at 65 if they were to stop saving for just one year in their 40s.

Finally, do not rely on your partner. First, because it isn't tax efficient. When you retire you will each be entitled to an income of £9,490 tax-free from your pension. So if you have separate pensions that amounts to an annual income of £18,980 tax-free.

If you choose not to have your own pension, or your husband has a much larger pot than you, then don't forget to keep an eye on things when he retires and buys an annuity. Around half of men with pensions opt to buy a single annuity. That means the income comes only to them and stops on their death potentially leaving you in the lurch.

A better option might be a joint annuity. These pay out a lower annual payment but will continue to pay out to the surviving spouse when the other dies.

Finally, when you are ready to buy an annuity, don't just go with the one your pension provider offers you. It is highly unlikely it will be a competitive rate. Instead, shop around. A little bit of effort at this point will boost your income so that you can afford to enjoy your long-awaited retirement.