Research has shown that the gender pension gap stands at 40.3%, a worrying statistic for women of all ages. However, as the cost of living sinks into household finances, women of pre-retirement age may need to find ways to make their money work even more in the hope of avoiding poverty in the future. retirement.
The gender pension gap sits at around 17% when a woman begins her career, but quickly snowballs throughout life until retirement sees them with barely a pension pot. more than half the size of their male counterparts.
The rising cost of living is also expected to hit women’s finances harder, potentially creating the perfect storm for women approaching their own retirement years.
Romi Savova, CEO of PensionBee, shared her expertise exclusively with Express.co.uk on how women can be able to save their retirement finances.
She commented: “The rising cost of living will disproportionately affect women, as the limited resources available to them will now have to be stretched even further.
“Women are more likely to have ‘lower wages’ and have smaller pensions at each stage of their career, and they are more likely to experience financial abuse. »
All of this combined leaves women “exposed to a higher level of vulnerability” throughout their careers and retirements.
There are many barriers behind this dilemma, with Ms Savova indicating that the most important are “societal expectations of caregiving and the pressure to take on unpaid work”.
Research has indicated that women do about 40% more unpaid work than men, such as childcare and household chores.
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This unpaid work not only means that women work more without pay, but it also reduces their earning potential.
Ms Savova explained: “The difference in paid working hours first becomes apparent between the late twenties and early thirties, when mothers generally tend to have their first child.
“This difference peaks again later in life, as women aged 50 and over are twice as likely to provide unpaid care for others than their male counterparts.
“As a result, men’s pension pots rise by an average of £90,000 more than women’s between the ages of 50 and 64. This is particularly worrying as women tend to live longer and often bear their own care costs. .”
Taking on these unpaid tasks means that women spend less time working in paid positions, which not only reduces their earnings but also their national insurance contributions, which in turn impacts their right to a state pension.
Ms Savova added: “Low incomes also limit women’s potential to benefit from government savings incentives, such as tax relief for pensions and automatic enrollment, throughout their careers.”
To help women make the most of their hard-earned money when the data is against them, Ms Savova shared some of her top pension pot tips.
She said: ‘One way for women to try to increase their retirement savings is to pool all existing pensions into one pot, which can have a noticeable effect on their eventual retirement income.
“Not only does this prevent them from losing hard-earned savings, but it means they only have to pay one set of fees, rather than multiple fees for various pots, which can erode the value of a repo. over time.”
Since retirement investments are interest-based, time is running out to ensure the pot grows big enough to be livable for years to come.
For this reason, Savova advised: “Leaving a pension invested for a few more years can significantly increase a retirement income. While everyone can legally access their personal and professional pensions from the age of 55 (57 from 2028), this does not mean that they should always do so, especially in times of high inflation.
She concluded: “Before committing to retirement, women should carefully consider whether they have other sources of income besides their pension and how long they expect this to last.”