Study shows 21% of women feel underprepared for retirement
According to a recent study by a leading equity release organisation, more than a fifth of women retiring in 2021 feel unprepared – and up to a third expect to be retiring on less than £12,500, the JRF’s Minimum Income Standard.
The bombshell “Retirement Ready 2021” study, commissioned by equity release specialists Key Retirement, covered a wide variety of issues surrounding retirement and gender, highlighting the long-term effects of the gender pay gap and illustrating an increased level of uncertainty amongst women in work. More than 1,000 people expecting to finish full-time work in 2021 were surveyed regarding their financial standing and retirement ambitions, revealing a stark contrast in retirement situation between men and women.
State pension vs company pension
The study also highlighted a disparity in proportion of pension income sources between men and women: for men, company pension schemes represented 34% pf their retirement income, with 30% sourced from State Pension; for women, however, the roles are reversed, with State Pension amounting to 34% of their retirement income to just 29% from company pensions.
The gender pay gap
These figures can be directly sourced to a ‘gender divide’ in pay, with women reportedly earning 15.5% less than men on average in the UK. This pay gap has a knock-on effect on pension contributions, leading to the results of the “Retirement Ready 2021” study: the average expected annual retirement income for men is £23,646, whereas for women the figure is £18,991 – a difference which means a near-£100,000 disparity in pension income over 20 years of retirement.
Planning for retirement
The study illustrates the importance of understanding your pension situation, and planning for retirement accordingly – with 20% of women unsure what their retirement income will be at all. CEO of Key Advice Will Hale, iterated the importance of retirement planning in a statement alongside the study:
“Planning your finances for retirement is important for everyone – but especially those who are either facing into the impact of the gender pension’s gap or a find themselves retired and struggling on less than the minimum income standard should speak to a specialist adviser. Making the most of your income in retirement is about knowing your options and getting good advice will ensure you consider how assets such as the equity you have in your home might allow you to live a more comfortable and fulfilling retirement.”
Retirement may well be a long way off for you – and indeed, the gender pay gap appears to be showing signs of shrinking – but understanding your pension continues to be a crucial directive in increasingly uncertain times. Knowing what you can expect from your company’s pension and the State enables you to understand the quality of life you’ll be able to afford, and the steps you need to take to reach the quality of life you expect.