New research from Unbiased.co.uk shows that 23 per cent of British women over 50 currently fear they will have no choice but to work until they physically are unable to because they won’t have sufficient money to retire. The research also indicates that only 28 per cent of women over 50 know what their pension pot should look like, compared to 45 per cent of their male counterparts.
The problem is partly caused by the gender pension gap and inequality of pay, and partly by the current cost of living crisis. Currently, 76 per cent of women over 50 don’t believe they will be able to retire at age 66, with 15 per cent over 65 who had planned to retire in the next 3-6 months, now returning to work. Almost half (48%) of those surveyed said they worried that what they had saved for retirement now wouldn’t cover the cost of living.
The research also showed that:
Karen Barrett, Founder, and CEO of Unbiased.co.uk said, “the pension gap is not going to just disappear, nor is the earnings gap. Add the fact that women also continue to be the primary group taking a career break to raise children and it's clear that women should be prioritising financial advice as soon as possible.”
Here’s what women can do to take control:
The earnings gap doesn’t really appear until women hit their 30s, so maximise your contributions in your 20s and let compound interest get to work on them. If it’s too late for that, remember that one extra percentage point of contributions can make a big difference at any time.
Have a healthy shared approach to managing your money – don't let either of you handle it all because you both need an ongoing awareness of your financial position and responsibility for handling it.
If you have significant assets in your name when you marry, it can be a good idea to ring-fence these and keep them in your own name.
As a family, you need to manage any impact on earnings one or both of you may have if you take a career break. Ensure that payments continue into both pension pots to ensure neither of you suffers a pension shortfall or becomes dependent on the other’s pension in later life.
Note the key milestones that lie ahead and work backward from them to develop a savings plan. For instance, as soon as your first child is born, you know the approximate dates they will start school, higher education, work, etc, and the periods during which you may be earning more or less.
Women will benefit from expert planning when it comes to potential pension sharing orders and asset investment as part of a divorce settlement.
Many financial tips directed at women inevitably make certain assumptions – one of those being that they will have children, and another being that they will be the one who takes the career break. This is not necessarily the case for every woman and your pension needs to reflect this.