It’s important for everyone to have a plan in place so that their standard of living doesn’t fall when they retire. A pension is the best way to do this. But did you know that while women generally live longer than men, they are less likely to have an adequate income in retirement. This is because women tend to end up with smaller pensions than men.
Women usually face a unique set of challenges that can significantly impact their financial security in their later years. Understanding these challenges is crucial for addressing the gap and ensuring a more equitable retirement landscape for women.
Pay and Pension Gap
One of the most significant factors contributing to the gender pension gap is the persistent wage disparity between men and women. On average, women earn less than men, which directly affects their ability to contribute to pension schemes. Lower earnings mean lower contributions and smaller pension pots upon retirement.
In addition, women are more likely to take career breaks due to caregiving responsibilities. Whether caring for children, elderly parents, or other family members, these interruptions often result in part-time work or even early retirement. Each of these scenarios leads to reduced pension contributions and lower pension benefits.
Many women also opt for part-time work at some stage in their career. This helps to balance professional and personal responsibilities, but it often means lower pay and fewer benefits, including reduced pension contributions. Part-time positions are typically less likely to offer robust pension plans, increasing the gap.
Longevity and Financial Planning
Women generally live longer than men. This means they need to stretch their retirement savings over a longer period. This increased longevity necessitates a larger pension pot to maintain a comfortable standard of living throughout retirement. However, women often retire with smaller pension savings, making it difficult to sustain themselves financially in their later years. This highlights the importance of financial planning tailored specifically to women's unique needs and circumstances.
What next?
Research has shown that there is often a lack of awareness and education regarding pension planning among women. Women need to be able to make informed decisions about their pension contributions and retirement planning.
If you’d like straightforward, jargon-free and fully inclusive advice on your pension or any other aspect of your financial planning just get in touch with us at Financial Equality Services to arrange a free consultation.
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