One in six women (16 per cent) fear they may never afford to retire – as they have on average over £20,000 less than men in their pension pots, new research reveals.
With typically just £43,117 saved to fund their life after work, more than half of women (56 per cent) in the UK who are approaching retirement age are worried they may not be able to enjoy the retirement they have always hoped for.
Meanwhile, a man’s pension pot currently contains an average of £63,222 – almost HALF (46 per cent) more than a woman’s.
Cost-of-living impact
The survey by Skipton Building Society – of 1,200 working adults aged over 50 – also reveals that the cost-of-living crisis is having a greater impact on women’s long-term financial goals than it has on men’s (39 per cent compared to 30 per cent). With household budgets squeezed, women are managing to put away just £193 a month in savings, compared to £296 for male workers.
The findings back up industry research that has long shown that women have substantially smaller pension pots than men. As well as being paid less than men, women are more likely to take time off work to care for children or elderly relatives, or to work part-time. This greatly reduces their ability to save for retirement.
Three in ten women polled said they have taken more than two years off work for maternity leave and childcare. A fifth of working women have also taken other significant breaks away from the workplace, compared to just 14 per cent of men. However, 69 per cent admit they did not consider at the time how this extended leave might affect their pension pot.
The cost-of-living crisis is also impacting pension sizes, as 55 per cent of women said the rising cost of living is outpacing their investments and pension savings.
Knowledge is power
Helen McGinty, the Skipton Building Society’s head of financial advice distribution, said: “This data confirms what we suspected – that there is a clear gender imbalance when it comes to our pensions. Whether that’s because of a systemic gender pay gap, or the simple truth that many working mums have had to take time away from earning, it’s a reality that everyone should be alert to.
“But as with many things in life, knowledge is power – and it really pays to know what your pension looks like, and if you’re on track for the retirement you dream of. Particularly for the women out there who may be at risk of a pension that falls short, it’s important to be realistic about how time away from work might have affected your pension.”
The research went on to find one in three with concerns about the affordability of their retirement, fear they will be too old to do the things they enjoy when they eventually finish working life.
And 23 per cent of these cited salary as an issue – as they expected to be earning more at this stage of their career.
Ms McGinty added: “With costs rising and savings getting stretched, those with one eye on their retirement have every right to be concerned. That’s why it is so important at any age to take the initiative, be in control, and plan ahead. Be aware of the decisions you are making, and how they may impact your financial future – if you need to, increase contributions to combat those gaps in earnings.
“After a life spent working hard, contributing to the system, and raising children, everyone deserves the right to a comfortable retirement.”
Skipton Building Society offers a free Pension Health Check Service and initial consultation for its members.
Make equal pension wealth your new life goal: download our Good Guide to Financial Wellbeing for Women
