AS a woman, you face many unique challenges in life (putting up with men, for a start!).
Financially, though, you are at a great disadvantage as well, which makes it particularly important that you ask for quality financial advice now, rather than finding yourself in trouble later on. Remember, as life goes on, you get to the point where, well, you have just run out of road.
New research by Unbiased and Opinium indicates that four out of 10 women in the UK, when asked how much they need to be saving to achieve the comfortable retirement they want, have to respond: haven’t a clue.
Traditionally, certain social factors have been held largely responsible for the reduced levels of pensions for women. We’ve discussed these before. There’s the so-called ‘motherhood penalty’ - women are more likely than men to take a career break of up to 10 years or more to bring up their young family and, if they return to work at all, tend to go back only part-time.
For this and other reasons, women tend to have lower savings in workplace and personal pensions than men. The research showed that among women in the 18-55 age group, a third said they had nothing at all in these pensions, and would rely only on the state pension, compared to just a fifth of men.
This career break and other circumstances also tend to reduce women’s wages, compared to men: it’s called the ‘gender pay gap’, the difference between the average hourly earnings of men versus women.
In 2019, men were earning an average 17.9 per cent more. Lower wages mean lower contributions into your workplace pension. The gender pay gap tends to widen significantly from age 40, which means 25 years when women are making much lower pension contributions than men.
These lower savings levels may lead to ‘pensions pessimism’ among women, a feeling of ‘what’s the point?’, a feeling of powerlessness due to a lack of information. This translates into pensions apathy and a loss of interest in saving for the future. The current economic crisis, spiralling inflation and the rising cost of living further distract women and mothers from figuring out, and then working towards, concrete pension goals.
In fact, two in five women said they had set no particular target income from their pensions, compared to one in four men. It seems that many women are ‘sleepwalking’ into an uncertain future.
When asked to make a guess how much they would need to secure a comfortable and safe retirement, 71 per cent of men were prepared to make a guess, compared to only 54 per cent of women.
A similar situation applied when people were asked if they knew how much they had in their pensions now. One in seven men didn’t know, but for women this rose to one in five, implying women were not were not receiving the same level of information about their pension savings – or simply weren’t paying attention to any information they did receive. There’s that pensions apathy again.
This suggests that, one way or another, women feel they do not have enough information to make that guess. It will be harder for women to know how much pension to save, if they do not have a target in mind.
This brings us to the core of the problem. Women need more information about the income they will get from a certain pension pot, and they need help to calculate how much they should be saving now, in order to achieve that.
As a woman, would you like to find out how much you’ve got, how much you will need, and if you need to save more now? We’re the pensions specialists – give us a call.
:: Michael Kennedy is an independent financial adviser and pensions specialist and can be contacted on 028 71886005. Further information on Facebook at Kennedy Independent Financial Advice Ltd or at www.mkennedyfinancial.com
