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Women on average will retire with 80% less money than men, according to the Chartered Institute of Insurers. And 31% of women rely on their partner’s pension as their main source of funding in retirement.
This is putting many women in a vulnerable position, especially if they separate or divorce – they may find they have less to retire on than expected, according to MoneyHelper.
However, there are ways you can fill a pension shortfall.
Here, we share insights from retired and non-retired women – plus 5 things you can do to help you create a financially independent future.
The study, carried out by YouGov for HSBC[@yougov-women-in-retirement-survey-jan-2022], surveyed 1,048 retirees and 2,695 non-retirees in England, Scotland and Wales – ranging from ages 18 to 55+.
More than half of women surveyed (52%) expect to struggle financially when they stop working. Younger women (aged 18 to 24) are more optimistic about their retirement, with 72% saying they expect to live comfortably.
Saving for retirement also takes a back seat when it comes to budgeting, as other things take priority. Almost 1 in 5 had to reduce the amount they set aside for their retirement because of the coronavirus pandemic, and 22% had to do so to support family members.
When it comes to women who've already retired, more than 90% said they needed up to £30,000 a year to fund their lifestyle. However, for many women, this is difficult to maintain.
Almost a third of retirees (29%) told us they didn’t have enough money to make ends meet and 10% of retirees said their retirement savings weren’t enough to cover household bills. Our survey also shows 30% can’t afford to run a car.
Although the gender pay gap is improving, women generally earn less than men throughout their careers. This limits the amount they can save for retirement. For example, women are more likely to take career breaks or reduce their hours to look after children or elderly parents, according to the Office for National Statistics (ONS). This affects their pension contributions and retirement income.
Life expectancy in the UK has also increased, with the ONS reporting that women can expect to live into their 80s or beyond. So any retirement income may need to stretch further over a longer period of time. This shouldn’t be underestimated.
The earlier you start saving for your retirement, the more likely you are to:
Taking action feels good. Here are some positive changes you can make today for a more comfortable retirement.
If you can, now’s the time to add as much as possible to your workplace pension or your retirement savings and make the most of the tax relief from the government. Some employers offer to match your contributions up to a certain limit – if yours does, try to make the most of it.
You should also check your State Pension forecast to see how much it’s worth. If you've taken a career break, you may have gaps in your National Insurance record, which can affect the amount you’ll receive. It may be possible to make voluntary contributions to make up for these.
Explore: Our retirement calculator
Take a fresh look at your budget to see where you could free up money. The more you save now, the more you’ll have to retire on.
Explore: Simple ways to save for your future
Investing is an another way to save for your future. It could give higher long-term growth than leaving your money in a savings account. The key difference is there are no guarantees. The value of investments can go down as well as up, and you may not get back what you invest.
At HSBC, you can start investing from as little as £50 a month and lower risk options are available (eligibility criteria and fees apply).
If you’re married, in a civil partnership or in a stable relationship and have shared assets, you may want to look at both your pensions and savings together. Our retirement calculator can help you work out the cost of living together when you’re no longer working.
If you’re near retirement age and are concerned you won’t have enough money, think about whether you can delay when you finish work. If that’s an option, let your pension provider know as it may make sense to change where your pension is invested.
Switching to reduced working hours or ‘semi-retirement’ can also give you more financial security, as well as a better work-life balance.
Explore: What to do if you haven’t saved enough for retirement?
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