How we are closer to achieving parity of retirement income beween men and women.
Prudential have recently released figures from their “Class of” study that show the gap in retirement income has almost halved in the last 10 years. Average retirement income for women retiring this year was £16,900, as opposed to an average of £21,850 for men; a gap of £4,950. Of course this is just an average and many women retire with much more security and wealth but it got me thinking.
The shrinking of the gap over the years reflects the increased role women play in total household earnings. Kirsty Anderson of Prudential commented;
“As working patterns continue to change and become more flexible and shared parental leave is more widely encouraged by the government agenda and employers, the future looks positive for narrowing the retirement gender gap.”
It doesn’t have to be inevitable that a career break should leave a gap in your pension. “It can be difficult to justify any extra expense when taking a career break, but it is extremely important for anyone taking time out of work to maintain their pension contributions. Saving as much as possible as early as possible is the best way to secure a good quality of life in retirement.”
It’s important to consider how to manage your wealth together, but unfortunately being widowed or divorced can have a massive impact on women’s fortunes in retirement and you have to think about every scenario.
At FMB, when we go through the financial planning process most people come to discuss their finances as a couple although this is not a given. Our IT systems build each person as an individual client with linked relationships; it could be to a spouse, a child, a power of attorney or indeed a trust. I would recommend all women are involved in the big picture stuff so make sure you sit with your financial planner together, even if you delegate day to day finances to your spouse. It’s not a crime to do this, I’m an independent woman with my own income but my husband is just better at figures (a trained accountant) and I love cooking so there we are.
When we build your plan we look at disaster planning and what would happen if one of you should die, but actually divorce statistics in later life are increasing and as this risk cannot be insured against (well not yet!) this is a very difficult area. The only real way to avoid this vulnerability is to work towards parity of retirement income which is where my blog started!
Statistics from Prudential UK