With people living longer and the cost of living is increasing, what does this mean for our retirement? According to a recent Scottish Widows survey, two-thirds of women are concerned they will run out of money ahead of retirement, but alarmingly, many still cut their pension contributions.
A third of women aged between the ages of 22 and 29 are also unaware of how much they will need in their pot when they reach pension age. However, 10% of women (in that age group) have opted out of their employer’s pension scheme, revealed the Scottish Widows’ survey.
29% said the reasons for this were due to not being able to afford regular pension contributions and 14% spending the money now rather than saving for their retirement.
Fewer women (compared to men) are contributing to their pension from an early age as well. Just 14% (of women) contribute to their retirement fund by the age of 22, compared to 19% of men, increasing the UK’s gender pensions divide.
Despite this, 23% of women in their 20s would be ‘frustrated’ if they could not retire by 60, which is six years earlier than the current state pension age.
This decision is just one of many factors creating a disparity in pension pots, which leaves women 10% financially worse off than men by (the age of) 22 and 50% worse off by the age of 50.
As well as taking time off work to raise a family and pay for childcare, another factor in the pensions gap is the disparity between men and women’s earnings. On average, a man will earn £33,000, whereas a woman will earn just £24,800 meaning women will need to work for 19 more years to match a man’s savings.
“Many women, particularly younger women opt out of pension schemes due to financial constraints and immediate spending needs, worsening the gender pension gap” says Claire Davison, financial planner
“Factors such as career breaks and earnings disparities contribute to this imbalance, emphasising the importance of early pension engagement and education. I advise clients, especially women, to start saving in their twenties and stay informed about pension entitlements. Closing the gender pension gap requires efforts from individuals and policymakers to ensure financial security in retirement” says Claire Davison
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