Savings habits among men and women differ greatly when it comes to retirement. Even though the message that saving is crucial for a secure financial future is being broadcasted loud and clear, a Scottish Widows report revealed that women save 38% less than men – a gap that has widened in recent years.
Worse still, 21% of women have no pension savings, compared with 9% of men who are relying solely on state provision, according to a separate study by Prudential.
Low pay still experienced by women is a contributing factor towards the worrying gap between how much men and women save for retirement. It may also be a challenge for women who take time out of work to raise a family to save throughout their lives for retirement. Yet with life expectancy for women still longer than men, at an average of 79.5 for men and 83.3 for women, there is a stark need for women to save more, and to make plans and provisions in the event that they are left alone.
Saving
The average amount saved by women per month for retirement is just £100, according to Scottish Widows. Hannah Edwards at BRI Wealth Management says: “As women have a longer life expectancy than men, a woman does logically need a larger pension pot in capital terms.
“The new pension freedom rules – which allow access to pension savings for the over 55s – have been immensely well received by investors and planners, but you do need to be mindful that the capital does not run out. In Australia, where people who have enjoyed pension freedoms for a few years longer than ourselves, the average woman runs out of capital at just 86, for example.”
It is important to save as much as possible for later in life. To retire on an income of £25,000 a year you will need to have saved a pot of £298,500 to top up your state pension, according to calculations by Hargreaves Lansdown.*
Planning ahead
More than one in 10 women in the UK say their partner is responsible for pension planning, according to Scottish Widows . Patrick Connolly at Chase de Vere says: “In the past, too many women have relied on their partner to take control of their pensions and investments. This has been changing, but we still have further to go.” Connolly says everyone needs to have a good understanding of their own pension provisions to ensure they are on target to have a comfortable standard of living in retirement.
“Although it may seem like a long way off, the sooner you start saving, the easier it will be to give yourself a more comfortable lifestyle in retirement. This will also help give you more control over when and how you are able to retire,” he says. “Even if you can’t afford to save much initially, it is better to do something than nothing. You can always increase the amount you are saving in the future
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