Why women need to save £185,000 MORE than men for their retirement (and what you can do about it)

How much have you saved towards your retirement? And is it enough? Find out why women need to save £185,000 MORE than men.

New research from the Scottish Widows Retirement Report has found men, who typically have higher earnings than women and are less likely to take significant time out of work to raise families, will have closer to £350,000 saved for their retirement on average. 

However, women currently aged in their 20s will have only saved around £250,000 on average by the time they retire. And not only are women lagging behind men on their savings, but we need more money as we tend to live longer than men, and may spend longer periods needing care in later life.

In fact, the Scottish Widows Retirement Report found that young women need to save an average of £185,000 more during their working life to enjoy the same retirement income as men. It’s clear that more pension gender equality is needed.

No wonder that half of all working women are said to be worried about money in retirement!

How financially resilient are women?

MetLife conducted research into women’s financial resilience and found:

  • One in five (19%) UK adults say they wouldn’t be able to make ends meet without the help of a loan or credit card.
  • Just 23% of women would be financially resilient if they experienced a loss of income, nearly half the rate of men (39%).
  • Women were more likely to feel resilient if they could rely on the help of a family member or partner financially (33% vs 25%).
  • Of those that said they would not be able to make ends meet, women were again more likely than men to struggle financially, 23% of women said they wouldn’t be financially resilient, compared to 15% of men.

Three tips to help you feel more financially secure

So what can we do to address the savings shortfall and protect our quality of life when we get older? Rich Horner, Head of Individual Protection at MetLife, shares three tips that could help women feel more financially secure.

1) Create a budget

Setting and then maintaining a budget- be it weekly or monthly- is fundamental to understanding your spending capacity and ensuring you keep track of your current and future outgoings.

A budget allows you to put aside saving towards a long-term goal, helps avoid overspending and prepares you for financial emergencies. If your bank does not have a spending tracker, check out budget tracking apps like Money Dashboard, Yolt or Plum to get you on track.

2) Save to spend

A savings plan not only offers a financial safety net in the event of a crisis, it also helps steer towards a long-term goal. With more women than men adversely affected during the pandemic, women were forced to re-evaluate their financial situation, as many grappled with furlough, job losses, a decreased income, and increased hardship.

Creating a savings plan can help women financially plan for life events such as starting a family or buying a house.

3) Look into insurance

In what has been a very uncertain time, our research found that 16% of people cite having a reduced income and having to dip into savings as a major concern for the next six months. Feelings of anxiety when it comes to money can be a good motivator for people to seek extra assistance, as nobody wants to have to worry about their long-term finances.

How to plan for your financial freedom

It’s easy to put off pension planning, especially if you’re still young and your retirement feels a lifetime away. It’s also hard to prioritise if every penny of your income is spoken for each month. But trust us, those years will fly by and you could soon find yourself wishing you’d started preparing and saving earlier – even if it was just a modest amount.

The good news is that there are steps you can take now to work for financial freedom. We go through them in full here, but here are some quick tips for you:

  • Work out your income and outgoings and try to live within your budget.
  • Pay your credit card off in full every month.
  • Build an emergency fund.
  • Set up an automatic savings plan – even if it’s modest to begin with.
  • Look at your pension options.

As dull as you may find financial management, it pays to build your financial confidence and educate yourself about money and live responsibly.

Photo by Mary Eineman