The gender gap between men and women when it comes to expected retirement income widened again last year, after shrinking for a number of years, according to a new study by insurer Prudential. Women retirees currently have an income of £14,450, compared to an average annual income for men of £19,850. Only 40% of women were confident that their retirement savings would provide a sufficient income to enjoy a comfortable life, compared to 60% of men.
This follows a separate study by Scottish Widows last year, which found that a quarter of women are saving nothing for their retirement, in part due to a worrying lack of awareness about the subject: some 43% of women reported they have little or no understanding of individual pension savings. But it's not just about awareness: many women are much less able to save due to lower excess income.
A quarter of women earn less than £14,000 per year, compared with 14% of men, says Scottish Widows. And many mothers face a "triple cost", according to women's rights charity the Fawcett Society. Time taken off for maternity leave cuts many mothers' income and pension contributions. This is exacerbated when they return to work on reduced hours. Lastly, childcare costs put more pressure on their finances.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
It doesn't help that many women will lose out on receiving a full £155.65 state pension because they opted out of paying the additional state pension top-up, resulting in their under-paying National Insurance during their working lives. And even for those who did contribute, many women born in the 1950s will be left worse than expected by the government's decision to bring forward the increase in their retirement age from 60 to 66.
|Source - Prudential's Class of... retirement research 2008 to 2016*Rounded to nearest £50|
Natalie joined MoneyWeek in March 2015. Prior to that she worked as a reporter for The Lawyer, and a researcher/writer for legal careers publication the Chambers Student Guide.
She has an undergraduate degree in Politics with Media from the University of East Anglia, and a Master’s degree in International Conflict Studies from King’s College, London.
Bitcoin hits new heights - is now a good time to invest?
The value of Bitcoin has surged to a 20-month high. Why is Bitcoin rising and is now a good time to invest?
By Vaishali Varu Published
Gold hits record high - could it soar higher next year?
The yellow metal has hit a new all-time high. We look at market expectations for 2024, whether investors should sell and take profits, and how to invest in gold.
By Ruth Emery Published