We need to make sure that women can afford to have as good a later life as men
Women in later life often bear the burden of a lifetime of lower pay and unequal working conditions, making it hard to save for their later life.
As part of our series on planning and preparing for later life, Nayyara Tabassum explores the ‘gender savings gap’ and the factors that can lead many older women to have lower levels of wealth than men.
Last month, my dad retired after 40 years of being a professor. While we were talking about his post-retirement plans, I realised that I hadn’t done much financial planning for my own later life.
Speaking to some of my male and female friends and colleagues, I realised that while most of the men had some sort of financial planning in place (i.e. savings or stocks), the women I spoke to had hardly been able to save at all.
The dynamics in my own personal social circle seem to corroborate established scientific evidence –women are less likely to save than men.
Bridging the gender savings gap
It’s becoming well understood that women face a gender savings gap. Throughout life, women typically have lower incomes than men. And just as we face a gender pay gap, over time we find ourselves with smaller reserves of savings and lower pension income in later life.
This is borne out by the evidence:
In the Lifetime Savings Challenge Report 2017, research by Close Brothers and the Pensions and Lifetime Savings Association (PLSA) showed a distinct difference between the level of savings that UK men and women had.
Data from the Department for Work and Pensions shows the income of women currently in retirement is, on average, £42 per week lower than for men.
Prudential found that on average, women save £4,900 less per year in to their pension than men and have smaller pension pots than men overall.
While there is a great deal of research that women are less financially prepared than men, it isn’t always as clear why this may be so.
One thing we do know is that, in addition to lesser incomes, women tend to be the ones who take time off to care for children or for parents and loved ones.
This means that they are more likely to have disrupted work histories, which has an impact on their savings and pension schemes as well as their personal health and wellbeing.
We can also see that women can be less likely to contribute to pensions pots or save for retirement when compared to men, possibly because they are reliant on a partner or someone else in terms of finances.
Just as we face a gender pay gap, over time we find ourselves with a smaller reserves of savings and lower pension income in later life.
Supporting women to afford a good later life
Hargreaves Lansdown reports that even with the government’s auto-enrolment contributions, women still end up with a pension pot just over 11% less than their male colleagues.
This contributes to an entirely different picture of planning for later life. And as our research shows, older women bear the burden of a lifetime of lower pay and unequal working conditions.
Hopefully, by the time I am 60, I will be able to enjoy the financial security of a good pension pot and a strong reserve of savings. But for many women reaching later life today, right now it just isn’t a reality.