Yesterday I held my SavvyWoman retirement event and one of the speakers talked about how retirement – and saving for it – tends to be a lower priority for women than men. And while women aged 25-34 would like to retire on £29,000 a year, they underestimate how much they’ll need to save for retirement on that amount.
BlackRock, the investment company, surveyed over 1,000 women in the UK (as part of a global survey of 18,000 men and women) and found that:
- British women and men feel uncertain about their financial future.
- As women get older they become more engaged with the issue of retirement.
- Women would like to retire on quite a high income.
- More women than men prefer to put their money into cash rather than stocks and shares.
- Having a plan and using an adviser leaves women more in control of their financial future.
The gender differences
As is often the case with money, priorities and risk, this research showed a definite gender split:
- 64% of women were unwilling to take any risk with their money, compared with 50% of men.
- 61% of women are confident that they know how to preserve their financial wealth, compared with 73% of men.
- 34% of women said that funding a comfortable retirement was their top priority, compared to 44% of men.
Women and retirement – priorities at different ages
BlackRock found that, not surprisingly, retirement was a higher priority for older women than for those in their 20s or early 30s.
- Among women aged 25 – 34: almost two thirds have not yet started saving for retirement. Their number one priority is to pay off their debts followed by ‘growing their wealth’ and saving for a deposit. Funding a comfortable retirement is number six in their list of priorities.
SAVVY TIP: Women aged 25 – 34 would like to retire on £29,000 a year and believe that a pension fund of £142,000 would give them this income. In fact it would take over £500,000 to provide an income of £29,000 a year for life (although the state pension would provide an income of between £5,800 and £7,600 a year, depending on when you reach state pension age – more if you are entitled to additional state pension).
- Among women aged 35 – 44: over half (56%) have not yet started saving for retirement. Over four in ten (41%) are relying on the state to provide the bulk of their income in retirement.
- Among women aged 45 – 64: over half (52%) have not yet started saving for retirement. Despite this, over half (53%) are confident they will be able to fund a comfortable retirement. Funding a comfortable retirement is number one on their list of priorities, followed by paying off debts and paying off the mortgage.
How to start or increase your pension saving
If you’ve not started saving for your pension, finding out that you need to save half a million pounds to have a comfortable retirement may be a bit off-putting, to say the least. But there are ways you can start, or increase your retirement saving.
For those who’ve not yet started to save, BlackRock suggests:
- Make a plan and start early.
- Have a goal for how much you’d like to retire on.
- Take independent financial advice.
SAVVY TIP: If you cut out your expensive coffee habit (assuming you buy a £2.85 bucket of coffee daily), you’d save £22,230 over 30 years. If you made lunch twice a week, you’d save £15,560 over 30 years.
If you’re already saving for your retirement, you can:
- Try and increase how much you save if and when you get a pay rise.
- Regularly review your financial plans and goals.
SAVVY TIP: Read my article How much should I save for retirement? How much should I pay into my pension?
Budget changes – what do they mean?
One of the sessions at yesterday’s retirement event explained the Budget changes to pensions, and there were lots of changes to explain! New research by Fidelity shows that many women say they don’t understand the changes (although women are more likely to ask for professional help to explain them). The research found:
- Just over a third of women (36%) said they felt confident of their understanding of the pension rules, compared to 50% of men. I’m not sure whether this reflects a genuine difference in the lack of understanding, or a difference in the way women and men assess how much they understand!
- Just over half of women (51%) said they didn’t know what to do with their pension under the new pension freedom granted in the Budget, compared to over a third (36%) of men.
- Just over half of women (51%) said they’d take financial advice to help them make sense of the changes, compared to 37% of men.
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