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Millennial women will be worse off than their mothers and grandmothers

Written by: Paloma Kubiak
Today’s women will be worse off than the last two generations as a combination of lower paid and part-time work, motherhood and divorce exposes them to financial difficulty, and ultimately poverty.

The prospect for millennial women seems positive on the surface, but research reveals this group’s economic progress and financial resilience is stalling.

As part of the Insuring Women’s Futures (IWF) programme established by the Chartered Insurance Institute (CII), its research revealed that women bear the brunt of society’s risks throughout their lives.

As such, it’s identified six ‘Moments that Matter’ for girls and women where intervention could help secure their financial futures:

  1. Early years

Females are excelling in education but the choices they make as part of their career plans and their understanding of money and debt is lacking. Young male apprentices earn 21% more than their female counterparts because of the sectors they choose. Student debt for women is also compounded as they study courses where the work is lower paid, opting for part-time work and taking on caring responsibilities, so it takes them longer to pay off the debt. There’s also a rise in mental health issues for women aged 16-24.

  1. The workplace

Automation spells trouble for women as the majority undertake administrative and secretarial posts which are at higher risk of being made redundant. The pay gap won’t close until at least 2050 and women will work longer through having children. At this point, women need to develop savings and pensions routines, the CII suggests.

  1. Relationships

Cohabitation has doubled over the past 20 years but 35% don’t realise that cohabitees don’t have the same rights as married couples. While the majority still marry, more than 100,000 marriages break down each year, with the typical age of divorce at 44. Due to women’s dependence on their husbands, women have only £9,000 median pension wealth while men have over £30,000. The report revealed that 71% of couples don’t discuss pensions during divorce.

  1. Motherhood and carer positions

Women spend 36 hours a week on domestic tasks and childcare, double the amount for men and 59% become informal carers. This all helps to constrain their career and earnings. Society increasingly expects mothers to work part time (and care for family) but these posts are paid 30% less.

  1. Later life

The good news is that women are living longer but this means they can also expect to work until they are 70 but a quarter of those aged 50-64 will have caring responsibilities. More households also have dependent children in later life so women continue to care while trying to build up their pension. In the end, women are left with a significant pension deficit. At age 65–69 men’s average pension wealth is £179,091 – five times that of the average woman’s peak pension wealth.

  1. Ill-health, infirmity and dying

Despite the rise in life expectancy, on average, women can expect to live 19 years in ill health, while for men, it’s 16. As such, the research suggests that women submit to the ‘longevity trap’ as they’re increasingly likely to need home help and care towards the end of their lives. The average cost of care for a 65-year old woman who needs to live in a care home is £132,000, nearly double men’s.

Jane Portas, lead author, said: “This report shows that despite their increased freedoms and progress, women in Britain today generally remain significantly dependent on their male partners, family and the state and fundamentally lack financial resilience. This means we are all exposed and has much broader implications for our society and economy. Many of the issues leading to women’s risk exposure are deep rooted. They will only get worse for the next generation unless we act now with fresh, innovate approaches and a change of mind-set.”

Kate Smith, head of pensions at Aegon, said: “Women face an uphill struggle when it comes to saving, and are more likely to be constantly juggling life, career and kids leaving little room for managing their finances. But it’s crucial they actively engage with their financial plans and pension savings – burying heads in the sand is simply not an option. This shouldn’t be an issue which is looked at just by women. In today’s world, couples should discuss their finances together to make sure both partners are on track for individual financial security.”

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