A wake-up call for women: act now or you will suffer in retirement

Written by on 6th May 2016

The below blog, from Simon Read, a freelance writer and broadcaster and former personal finance editor of The Independent, first appeared on the Spectator website on 4 May and is reproduced here with their kind permission.

Are women sleepwalking into a retirement nightmare? That’s the suggestion behind new research published by investment group Fidelity. It revealed that while women’s average retirement income is likely to be around £5,000 less than men, almost twice as many women have no idea about their pension pot or its payout.

It’s not the first time similar worrying research has been published. Last year Scottish Widows reported that women save 38 per cent less than men and that the gap that has been getting wider in recent years. More worryingly, 21 per cent of women have no pension savings at all, compared with just 9 per cent of men, reckoned Prudential.

All these studies send out the same alarm bells: women who are already facing a worse financial future than men will end up even worse off if they do nothing about it.

If you’re a woman, what can you do? The simple truth is that all folk should be planning ahead for retirement. No matter how far away it seems, it’ll arrive sooner than you expect. And with no planning, your retirement years can turn into lean ones, rather than the golden times you should expect after a lifetime working or bringing up a family.

For women the problem is intensified long before their retirement by the gender pay gap. Unbelievably given it’s 2016, the current difference between full-time men’s and women’s wages is 13.9 per cent, warns the equality charity The Fawcett Society.

It says women can earn less than men as a result of differences in caring responsibilities; clustering in low skilled and low paid work, which is still dominated by women; and outright discrimination and the glass ceiling.

It means women are likely to earn £300,000 less than men over their working lives, according to recruitment company Robert Half. That gives them a hell of a lot less cash to stash away for their financial future.

One of David Cameron’s stated aims is to ‘end the gender pay gap in a generation’. Last year he set out new rules forcing firms with more than 250 workers to publish gender pay differences.

Shining a light on dodgy pay differentials is a start, but is only likely to benefit future generations. Today’s women workers are likely to face a continued battle for fair pay which will continue to resonate when they’re confronted by their diminished retirement incomes.

With no government help, women need to help themselves. To do that it’s important to wake up to some harsh financial realities. Avoiding thinking about finance will only hurt your own money prospects.

There are two main things to consider: what do you want your future to look like? Will you be able to afford it?

[Alt-Text]

Whatever you hope for your retirement, if you’re a woman you’re almost certainly not going to be able to afford it. But it would be a mistake to simply shrug your shoulders and do nothing. No matter how close you are to retirement, you can improve things.

How? They key is to get control of your finances and set them on a path that will, hopefully, go some way towards giving you a better chance of a decent retirement.

You’ll need to match your ambitions – alright, temper them – to your financial realities and it won’t be easy. But by a mixture of budgeting better, working longer, spending less and saving more, you should move onto a more financially rewarding path.

You’ll still fall way short of men’s retirement expectations, but improving your own should give you more freedoms to enjoy life when you do get older. Don’t forget you’ll have longer, on average, than men, to enjoy them.

Financial institutions have a role to play in this, I reckon. They need to give women more help so that they can easily understand their choices and the risks of doing nothing. Frankly any companies that do go the extra yard to help women are likely to yield better customers.

But if you’re a woman that’s not something you can rely on. Instead it’s essential to take financial responsibility for yourself as soon as you can if you want to achieve a wealthier retirement.

Simon Read is a freelance writer and broadcaster and former Personal Finance Editor of The Independent. 

About The Spectator

The Spectator was established in 1828, and is the oldest continuously published magazine in the English language. The Spectator’s taste for controversy, however, remains undiminished. There is no party line to which its writers are bound – originality of thought and elegance of expression are the sole editorial constraints. The result, week after week, is that the best British journalists, critics, authors and cartoonists turn out their best work, to produce an extraordinarily wide-ranging title.