Women fall nearly £30,000 behind men in retirement
Half of women report feeling worse off than a year ago compared to 45% of men.
The report finds that the gender gap in retirement savings has increased by over 10% in 12 months.
The report highlights that in terms of savings put aside for retirement, women are now saving an average of £776 per year less than men for use in old age – significantly higher than the £700 gender gap recorded last year.
Therefore means that a 30 year-old woman who maintains this average annual rate of saving will face a shortfall of £29,800 in today’s money, compared to her male counterpart, should she choose to retire at 65 years-old.
Lynn Graves, head of business development, corporate pensions at Scottish Widows, said: “Important differences in lifestyle such as being more likely to work part-time or have a full-time caring role, mean women often find it more difficult to save for the long term and retirement.
“It has therefore never been more important for the pensions industry, Government and employers to raise awareness of this gender gap in retirement savings and help women prioritise their pensions.”
The number of women saving nothing for retirement has also increased since last year. Over a quarter are failing to put anything aside for old age, compared to 23% last year.
In comparison, 19% of men admit to saving nothing for retirement.
Debt is also hitting women’s retirement savings pots hard.
A third of women are prioritising paying off any credit cards or loans over saving for a pension, with the average amount owed (excluding mortgages) jumping significantly from £10,174 last year to £10,922 this year.
Since last year, the average monthly saving has fallen steeply from £130 to £95 for women, whilst the average for men has risen from £174 to £185 during the same timeframe.
Lynn Graves commented: “This ‘rainy day’ attitude reveals that many women view their savings as a pot to dip into to cover unexpected costs at any time and not as a fund to be ring-fenced and protected for the future to pay for retirement.
“Although there is a clear need to balance everyday living costs with unexpected expenditure shocks, this can’t be at the expense of women protecting themselves in old age.”
Scottish Widows says that the fall in monthly saving carries considerable long-term consequences. For a 30 year-old woman, a £35 drop in monthly savings could reduce her final fund by £16,000 in today’s money if she retires at 65 years-old.
Meanwhile, the slight increase in men’s retirement savings would see a 30 year-old man’s fund bolstered by around £5,000 by the time he reaches the average retirement age of 65 years-old.
The report also showed a positive shift in attitudes amongst women who are already saving into pensions, many of whom are reluctant to cut their contributions.
If faced with a 10% fall in income, most women said they would cut spending on food, clothing and going out first and just 3% would cut back on pension contributions.
Lynn Graves added: “The recession has had a major impact on people’s attitudes to managing their finances, as the messages to ‘live within your means’ have been hammered home.
“While women are right to focus on making sure their debts are manageable, other sacrifices may need to be made to ensure retirement planning is in place.
“There is clearly a demand for greater financial support and financial education to help people get the balance right between managing debt payments and taking a realistic approach to long term savings.”