Gender Gap

Gender Gap in Retirement Savings


Recent research suggests the pandemic has further increased the gender pensions gap.

Research from the Centre for Economics and Business Research (CEBR) shows the gender pension gap has widened to more than £180,000 among people over 55. Some 30% of women, aged 55 and over, polled for the study said their financial situation had worsened since the start of the pandemic with more women furloughed than men according to HMRC, which has impeded their capacity to save money for their pension pot. A quarter of men said the public health crisis has impacted their pension savings. The disparity could be attributed to women being more likely to work in sectors particularly hit by the pandemic.

Men are anticipating an annual retirement income of £20,712, whereas women expect their income will be £14,964 in later life. Considering life expectancy, the gender pensions gap could be as much as £183,936. This is despite the fact that women contribute more into their pension pots in percentage terms than men. In addition to this, the research found that women have lower incomes in retirement across all lengths of their working life, as men who have worked full-time for 30-34 years receive the highest average annual retirement income of £22,776, while their female counterparts receive £17,004.

Women put 9.4% of their income into their pension pot. In comparison, men only use 8.3% of their income for their pension pot. This is due to the difference in average earnings of each gender in 2020. Men are able to contribute £3,184 to their pension pot, whereas women can only afford £2,340.

The result of all this, according to the research, leaves the average woman needing to work an additional 14 ½ years to catch up.

So how much is enough in retirement?

The Retirement Living Standards, based on independent research by Loughborough University, have been developed to help us to picture what kind of lifestyle we could have in retirement. It shows what retirement may look like at three different levels – Minimum, Moderate and Comfortable - and what goods and services would cost for each level. This can be found at

This research is eye-opening! A single person will need about £10,200 a year to achieve the minimum living standard, £20,200 a year for moderate, and £33,000 a year for a comfortable lifestyle. For couples, it is £15,700, £29,100 and £47,500 respectively.

The minimum lifestyle covers all your basic needs with occasional activities and one basic holiday a year. The moderate lifestyle fairs better providing better financial security and more choice on spending your money, whereas the comfortable living standard allows you to be more spontaneous with your finances and affords the flexibility to go on more holidays, eating out regularly etc. The question is which one do you want to enjoy?

The current full basic state pension is £9,339 per year. As the State Pension is less than the minimum lifestyle highlighted earlier, then saving for the retirement you want is crucial and the earlier you start the more chances you have of achieving the lifestyle you want. The State pension, though for many will form the very basic backbone of most people’s retirement plan, it is also inflation proofed income that’s guaranteed to be paid for the rest of your life no matter what. To put this into context if you were looking at age 65 to purchase on open market annuity this would cost around £370,000 after taking tax-free cash. So it’s really important that you maximise your state pension wherever possible in addition to your personal pension savings.

At Armstrong Watson Financial Planning & Wealth Management we work with you to build your retirement plans and work alongside you to regularly review these so you know if you will remain on track. We can use cashflow forecasting to allow you to visualise your planning more easily and help you make informed decisions.

To discuss your retirement plans please get in touch with our financial planning and wealth management team.

Contact Kerry

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