There's been a long-standing gender divide when it comes to retirement preparedness, and unfortunately, it looks as though that gap still holds true – and it gets worse with age.
The latest Women and Retirement report from Scottish Widows suggests that, despite positive signs of engagement in their 20s, women still face a significant retirement shortfall, with the gap between men and women widening as they get older. According to the figures, while 26% of women and 30% of men in their 20s think they are preparing adequately for retirement, this gap increases in their 30s, by which time 48% of men believe they are saving adequately, compared with just 31% of women.
It is at this age that women are most at risk of falling down the "savings gap", said the report, with savings levels dropping from then on. "When it comes to attitudes towards retirement saving, young men and women appear to be almost on a par, yet [there's] an alarming divergence in the 30s which needs to be addressed," said Jackie Leiper of Scottish Widows. "The need for pension providers, the Government and employers to offer more targeted engagement, education and support for women is becoming more prevalent."
Interestingly, the figures suggest a clear reversal of fortune when it comes to both savings levels and attitudes to saving for retirement: while the number of women expecting a big shortfall in retirement shoots up by 10 percentage points between their 20s and 40s, the proportion of men expecting a shortfall rises by just 3% over the same period, which is a reversal of the trends seen during their 20s when men are more worried about their retirement income failing to meet their needs.
Not only that, but the levels of optimism shown by women earlier on are mirrored by their saving habits, as they pay more into workplace schemes than men in their 20s. Of those paying into a workplace pension, men of this age put away an average of £93.26, while women are saving around £180.36 per month. However, their saving levels then drop as they get older while men start to put away more: the biggest difference can be seen between the ages of 40 and 49, when men save an average of £234.53 in their pension each month, while women save just £125.19.
Much of this divergence is arguably down to the fact that more women than men stay at home to look after children, which can understandably have an impact on their income, as well as the amount they're able to save for retirement. The report noted that, given that the current average of women having children at around the age of 30, "there's a clear link between the dip in financial optimism and saving levels at this age with new financial challenges juggling work and family".
However, a lack of awareness around their retirement needs could play a significant part, too, with 71% of women admitting that they don't know how much they'd need to save for a comfortable retirement, compared with 52% of men.
Even though a clear gender gap remains, the fact that more women in their 20s are engaged with their pension could paint a positive picture for the future. Thanks to automatic enrolment, more and more women are paying into a workplace pension, and it's hoped that this trend will continue into their 30s and beyond.
If you're yet to sign up, it's time to get enrolled! Even if your workplace doesn't yet offer a pension scheme, they'll be obliged to in the next few years, and in the meantime you could always consider opening a personal pension or even saving into an ISA as a source of future retirement income.
Whatever you do, it's time to get started. The importance of saving adequately is becoming increasingly pressing as life expectancies increase and fears over state pension provision similarly rise, and being proactive can ensure you close the gap so both women and men can look forward to a comfortable retirement.
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