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The gap between the expected annual retirement incomes of men and women has grown by £1,000 in the last year, which means that women would be wise to up their pension saving now to avoid worsening the gap – and their chances of a decent retirement income – in the future.
The data, taken from Prudential's Class of 2017 study, shows that women who are expecting to retire this year will be £6,400 worse off on average per year than their male counterparts, as well as nearly £200 a year worse off than women who retired in 2016. Clearly the retirement gender gap is moving in the wrong direction.
This is despite the fact that women can expect the second highest average annual retirement income on record this year, of £14,300, down from last year's record of £14,500. Indeed, it's the men's increased income that is driving the gap growth, as men can expect an annual retirement income of £20,700.
This is £900 more than men's projected income last year, marking the fifth consecutive year of growth and yet unfortunately also driving the gender gap to its highest level for three years. Overall, data gathered over the last 10 years shows that men retiring this year will be 45% better off than women, which is fortunately down from the widest gap of 84% reported in 2008.
"For anyone who takes a career break, maintaining pension contributions and, where possible, making voluntary National Insurance contributions after returning to work, should help to minimise the impact on their retirement income," suggested Kirsty Anderson, a retirement income expert at Prudential. "The best way to secure a good quality of life in retirement is to save as much as possible from as early as possible in your working life. Consulting a professional financial adviser to ensure that retirement financial plans are on track is a sensible route for many."
Luckily, it seems that women are starting to be better able to deal with employment and pension saving gaps, with 50% saying they are financially well-prepared for retirement, up from 48% who said so in 2016.
Additionally, "with a greater number of women staying in the workforce for longer these days, and employers increasingly offering more flexible working patterns, the outlook looks more positive for women's retirement incomes in the future," concluded Kirsty.
To help you make the most of your retirement, regardless of your gender, it's important to make the most of any workplace pension you are entitled to, find the right savings pot to grow additional pension funds – if you can cope with the risk of potentially losing your money, an investment ISA or stocks & shares LISA may give you the best chance at decent long-term returns – and never be afraid to ask for advice if you're not sure what to do.
If you're nearing retirement, and you're wondering how to get an annual income that is equal to or better than the expected averages noted above, why not see what an annuity can offer, or check out our guides to see what other options are out there.
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