The pension gender gap

Posted by siteadmin on Saturday 6th of February 2016.

AEGON’s latest annual retirement readiness survey highlights the challenges faced by homemakers when it comes to retirement and reinforces the importance of advice when it comes to financial planning.

The survey identifies homemakers as typically women, aged between 18 and 44, and are likely to be reliant on a partner or spouse for their income while they raise the children and keep the home.

Mind the gender gap

The role of women as homemakers impacts on their ability to earn, but even when they are in work, women are paid, on average, around 10% less than men. Couple this with the fact that women are likely to live longer and can therefore expect to spend more years in retirement, and the need to get the right financial strategy in place becomes even more important.


Expectation versus reality

This gender inequality could, in part, account for women’s expectations when it comes to how much they need to save in order to achieve a certain level of comfort in retirement. Retirement specialist,

Retirement Advantage, asked men and women aged over 50 how much they thought they needed to live comfortably in retirement. On average, men said £1,593 a month, while women said £1,340 – a drop of 15%. Women are also contributing less to their pensions - £131 per month compared to £180 for men.


Protecting the breadwinner

Paying into a pension isn’t the only consideration for homemakers. Where the majority rely on their partner or spouse for the household income, it’s important to think about the impact a sudden loss of earnings would have if something happened to the main breadwinner. That’s why taking out life insurance, critical illness cover, and / or income protection should be an integral part of the financial plan where families are reliant on one person.


The value of advice

For all people, not just homemakers, taking financial advice will help you put plans in place to prepare for unexpected circumstances and achieve a comfortable retirement. If you’d like to discuss your pension planning, or any other shortfalls you may have in your finances, please get in touch.