The pay gap between working men and women has been a hotly debated issue for many years. However, it now appears that this fiscal imbalance continues into retirement, with men claiming a retirement income that is around 68% higher than that of women.
According to the latest research by MGM Advantage, the financial position of women in retirement is far more austere than that enjoyed by their male counterparts. The findings of the research show that men claim an average income of £377 per week, while for women this figure is closer to £225. This is a considerable gap that is bound to impact the quality of life enjoyed by women during their work-free years.
When asked about how much more money they would need in order to feel comfortable, the research again uncovered a disparity between the responses of men and women. On average, men declared that they would need another £141 per week on top of their income to feel at ease financially, however, women reported that they would only need an extra £117. This equates to an income of about £27,000 per year for men and £18,000 per year for women.
This is a surprising result considering that women's income is, on average, lower than that of men's. In fact, the average man already has a retirement income that exceeds the amount of money women said they would need to make them feel comfortable. This suggests that not only do women have a lower retirement income than men, but they also have lower perceptions of comfort, with less money needed to achieve a feeling of financial ease.
But why are women's retirement incomes lower and why do they feel as though they could live on less than men? The answer is almost undoubtedly connected to the pre-existing differences in the salaries of men and women. Lower workplace earnings could mean that pension contributions from women are lower, which would naturally lead to a lower pension income. A lower working income could also prepare women to expect a similar level during retirement, which would explain why women claimed to be satisfied with less.
According to Andrew Tully, pensions technical director of MGM Advantage, this disparity is creating a "dual class of people in retirement". He added: "We believe that satisfaction is being met at a lower level because of women's starting point. They are accustomed to lower income and therefore live more prudently, and as a consequence they have a lower level of perception when it comes to comfort.
"It's a case of not so great expectations."
This research clearly suggests that there is a significant divide between the retirement incomes of men and women. But what can be done to level the playing field?
Sadly it looks as though it will take a few more years before pay equality really comes into force, so until then it is up to you to make sure you have enough money saved to provide a good standard of living during your retirement.
The key is to start saving as early as possible. If you aren't already enrolled in your workplace pension, start now. Pension contributions are tax-free and are added to by your employer, so you could soon have more stashed away than you realise. If you are already making contributions, see if there is any room in your budget to save a bit extra – even small amounts can add up.
Putting extra cash into a savings account could be another good way to make an extra nest egg for the future. Fixed accounts where you lock your money away are ideal for when you are saving for a particular purpose, and they usually offer the best interest rates. Check out our top fixed rate savings accounts to find the savings vehicle that suits you.
As the rules surrounding pensions change next year, it may be a good idea to get ahead of the game and find out more about the different ways you can get an income during retirement. You can read our retirement guides to find out more about your options and you can also check out our annuity planner to see if this is something that would suit you.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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