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The retirement gender gap

The retirement gender gap

Category: Retirement

Updated: 29/04/2014
First Published: 29/04/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

There has always been a gender gap when it comes to salaries, with male wages outstripping females', and it appears this trend is continuing into retirement.

Women's expected annual retirement incomes are 35%, or £6,700, lower than men's, according to Prudential's Class of 2014 research, with those women planning to retire this year expecting an annual income of £12,200 compared to £18,900 for men.

The gap still has a little way to go to reach the peak of 2010 when men's expected retirement incomes were £7,400 higher, but nevertheless, it is currently at its widest since then, and £200 (3%) more than last year.

With women taking career breaks to bring up children, experiencing lower pay and senior management roles being dominated by men, it's no wonder they struggle to build up their pension pot. But this is no reason to be disheartened and women should seek advice on how best to prepare for older age, looking at all their options for retirement saving.

The study also found that only 41% of women planning to retire this year feel financially well-prepared, compared to 54% of men, while just 29% of women believe they will have enough income to enjoy a comfortable retirement, compared to 47% of men. This highlights the importance of saving early for everyone, but especially for women.

On a happier note, both men and women's retirement expectations have increased since last year, with women's £450 higher and men's rising by £650, perhaps due to increases in wages and people being able to put more away at the end of the month.

Vince Smith-Hughes, retirement income expert at Prudential, said: "It is welcome news that average expected retirement incomes have increased for both men and women, but concerning that the gender gap remains stubbornly wide.

"The changes to pensions and how people can take their retirement income announced in the Budget last month will provide savers and retirees with more choices. However they don't alter the fundamental fact that many people are not saving enough for a comfortable retirement. There are also some specific practical steps that women can take today to improve their retirement incomes in the future. These include maintaining pension contributions where possible during career breaks and making voluntary additional National Insurance contributions when returning to work."

There are regional differences too, with those in the North West experiencing less of a gender gap with women expecting to retire on just £1,500 less than men. In London this rises to a staggering £14,000 difference.

Saving for retirement can seem like a daunting task for men and women alike, especially when you are confronted with all the costs of everyday living, but even putting a modest amount away regularly can make all the difference – and starting early is the key. Research all your options, take any advice available to you, and you'll build up a nest egg to help you live a comfortable life when you give up work.


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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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