This year’s class of 2017 research shows that women expecting to retire this year will be £6,400 a year worse off on average than their male counterparts and nearly £200 a year worse off than women who retired in 2016.
The study, which has tracked the retirement income gender gap for ten years, shows that men retiring this year will be 45% better off than women. The gender gap was at its widest in 2008 when the average expected retirement income for men was 84% higher than that expected by women.
This is perhaps unsurprising, given that women’s average earnings are less than men when working. As Emma Burns, Head of the Employment and HR Services Team at Hugh James has noted, the new legal obligation on larger employers to publish gender pay gap information is helping to highlight just how much less women on average earn when compared to men. Nationally the percentage difference is currently 18.1%. This figure only takes account of basic pay – if overtime was factored in, the difference would be much greater.
Shifting patterns in employment among women also appear to be impacting their ability to save for retirement. Close to 1.5 million women in the UK are now self-employed – a 22% increase in four years and twice the rate of self-employed men. Just over a third (36%) are saving adequately for retirement, compared with 47% of self-employed men and 58% of employed women.
Findings suggest this trend is set to continue
Younger women are the least optimistic about their retirement with only 18% of women aged 18-29 feeling positive compared with 25% of men in the same age group. The findings suggest that a lack of understanding of retirement is to blame.
The introduction of automatic enrolment could be particular effective for female savers. However given that it’s been estimated that 18% of earnings need to be saved each year to achieve an adequate income during retirement, there is still a long way to go to close the gap.
Additionally, with 16% of women working part-time, a significant proportion could be exposed when it comes to saving for their retirement due to the fact that automatic enrolment is only triggered when employees earn £10,000 a year or more.
Saving as much as possible as early as possible throughout our working life is the best way to ensure that we have control over our financial futures and are well-prepared for a comfortable retirement.