Women face unique challenges in retirement planning, but with tailored financial advice and proactive steps, they could overcome the retirement confidence gap and achieve a comfortable future.
Retirement is a major life transition, offering the opportunity to enjoy the rewards of decades of hard work. For many women, however, the shift from saving to spending comes with uncertainty. We believe that careful financial planning for women is essential to ensure a comfortable future, yet confidence in retirement preparedness varies widely.
Our recent Women and Wealth report found that just 11% of women described themselves as “very confident” in their retirement savings and planning. Interestingly, men were significantly more likely to describe themselves as 'very confident', at 25%.
The biggest worry for women concerning retirement is insufficient savings, cited by 59% of respondents. Inflation (45%) and rising healthcare costs (34%) also weigh heavily on their minds, while nearly one-third (28%) are concerned about longevity risk – the possibility of outliving their savings. Worryingly, a lack of financial advice was a main barrier for nearly a quarter (22%) of women as they approached retirement.
Experiences with retirement planning for women are shaped by a number of gendered factors. Four in ten women believe their savings have been affected by career breaks for caregiving, while the same number said their gender had a significant impact due to the wage gap.
Other barriers include planning for women’s longer life expectancy (36%), differences in financial literacy and confidence (18%), and limited access to employer-sponsored retirement plans (15%). These factors contribute to varied levels of preparedness and may make it more difficult for women to both plan for and achieve a comfortable retirement.
Despite their concerns, women are proactive in seeking information and support. Many turn to family and friends (45%) or use online retirement calculators (31%) to help them plan. Financial advice plays an especially significant role in retirement planning, with 28% of women seeking professional guidance – more than for any other life event such as starting a family, divorce, or losing a loved one. This could be due to the sheer scale of retirement savings, often the largest sum of money a person will ever manage, or the complexity of making those funds last a lifetime. The perceived daunting nature of retirement planning for women, coupled with the range of investment options and tax considerations, may also drive more women to seek and benefit from professional advice.
Women face unique challenges when saving or investing for their retirement. These challenges often stem from societal roles and expectations, such as having children, working reduced hours when children are young, and potentially relying on their spouse’s pension pot:
Career breaks for caregiving: Often women take career breaks to care for children or elderly family members. These breaks can lead to gaps in employment, reduced earnings, and lower contributions to retirement savings. As a result, women may find themselves with smaller retirement pots compared to their male counterparts.
Reduced working hours: Working reduced hours to balance family responsibilities can also affect women's retirement savings. Part-time work often comes with lower pay and fewer benefits, including employer-sponsored retirement plans. This can limit the amount women can save and invest for their future.
Reliance on spouse's pension: Some women may rely on their spouse’s pension pot for their retirement. While this can provide financial stability for many, it also poses risks. Changes in marital status, such as divorce or the death of a spouse, can leave women vulnerable and financially unprepared for retirement.
Despite these challenges, there are several ways women can take control of their financial future and ensure a comfortable retirement:
Start early: The earlier women start saving for retirement, the more time their investments have to grow. Even small contributions can add up over time, thanks to compound interest.
Seek professional advice: Consulting with a financial adviser could help women create a tailored retirement plan that addresses their unique needs and goals. Advisers are able to provide advice on investment options, tax considerations, and strategies to maximise savings.
Increase financial literacy: Improving financial literacy can empower women to make informed decisions about their retirement savings. Reading books, attending workshops, and following financial news can help women stay updated on the latest trends and opportunities.
Utilise employer-sponsored plans: If available, women should take full advantage of employer-sponsored retirement plans. These plans often come with matching contributions, which can significantly boost savings.
Diversify investments: Diversifying investments can help manage risk and may increase the potential for growth. Women should consider a mix of stocks, bonds, and other assets to build a balanced portfolio.
Plan for longevity: Given their longer life expectancy, women should plan for a retirement that may last several decades. This includes considering healthcare costs, inflation, and the possibility of outliving their savings.
Build an emergency fund: Having an emergency fund could provide a financial cushion in case of unexpected expenses or changes in income helping women to avoid dipping into their retirement savings prematurely.
While retirement offers exciting possibilities, it also requires careful financial management to ensure stability and longevity. Women are attuned to the distinct challenges they face at this phase of life, but with access to tailored financial advice, high-quality education, and compassionate support, they can enjoy retirement with greater confidence in their financial future. By taking proactive steps to plan and save, women can overcome the retirement confidence gap and achieve a comfortable retirement.
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This article is for information purposes only. It is not intended as investment advice.
The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits which is not guaranteed and like investments can go down as well as up. The benefits of your plan could fall below the amount(s) paid in.
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