For women, the salary gap they face during their careers eventually turns into a retirement savings gap. While our country has come a long way on gender equality, the pay gap remains a prominent issue. It’s felt in many aspects of women’s lives, most significantly in retirement savings.
Women are saving less than men for their retirement, with only 15% saving for the future compared to 20% of men[1]. The previously unpublished figures show that women are worried they will not have enough in their pension pot in time for their retirement, with 25% saying this is because they didn’t start saving for their retirement early enough.
Saving enough to ensure a comfortable standard of living
When it comes to how much they think they will hold when they reach retirement age, women anticipate they will have £168,006. This is almost £100,000 less than men who think they will have £255,328.
In addition, only 22% of women believe they are saving enough to ensure a comfortable standard of living for the future, compared to 33% of men. Data shows that women are saving less of their net income each month than men, with women putting aside 9.4% of their net income compared to the 11.4% saved by men.
Not knowing what to do with a pension pot at retirement
The findings reveal that more men have plans for their retirement pot than women, with 38% of women claiming that they don’t know what to do with their pension when they retire compared to 32% of men.
While 21% of men said they planned to withdraw it as a lump sum, only 13% of women said they planned to do the same. Furthermore, 21% of females said they would be relying on a State Pension in their retirement compared to just 13% of men.
Start early when it comes to saving and investing
The latest figures from HM Revenue and Customs[2] show that while the gender split of numbers of Individual Savings Account (ISA) subscribers is broadly equal, males accounted for a marginally higher proportion of the higher value ISA holders. Males accounted for 52% of ISA holdings worth £50,000 or more, while 52% of females’ own holdings are worth up to £2,499.
Factors such as longevity and career breaks can negatively affect a woman’s long-term financial situation. ‘Start early when it comes to saving and investing’ is the adage, and its importance should not be underestimated. But for some, it is even more important, including women and anyone who might take a career break.
Source data:
[1] Brewin Dolphin 23 May 2019
[2] 30 April 2019 https://www.gov.uk/government/statistics/individual-savings-account-statistics