Research has showcased that the gender pension gap is sitting at 40.3 percent, a worrying statistic for women of every age. However, as the cost of living sinks its teeth into household finances, pre-pension age women may need to find ways to make their money stretch even further in the hopes of avoiding retirement poverty.
The gender pension gap sits at roughly 17 percent when a woman first starts her career but quickly snowballs throughout life until retirement sees them with a pension pot barely more than half the size of their male counterparts.
The rising cost of living is also expected to hit female finances harder which could create the perfect storm for women approaching their own retirement.
Romi Savova, CEO of PensionBee, shared her expertise exclusively with Express.co.uk on how women may be able to save their retirement finances.
She commented: “The rising cost of living will disproportionately affect women as the limited resources they have will now need to stretch even further.
“Women are more likely to be ‘lower earners’ and have smaller pension pots at every stage of their career, and they are more likely to experience financial abuse.”
All of this combined leaves women “at risk of a higher level of vulnerability” throughout their careers and retirement.
There are many barriers causing this dilemma, with Ms Savova indicating that the biggest of which is “societal expectations around caregiving and pressure to take on unpaid labour”.
Research has indicated that women do roughly 40 percent more unpaid work than men, such as childcare and housework.
This unpaid labour doesn’t just mean women are working more without compensation but it also lowers their earning potential.
Ms Savova explained: “The difference in paid working hours first presents itself in a woman’s late 20s to early 30s, the time when mothers typically tend to have their first child.
“This difference peaks again in later life, as women aged 50 and over are twice as likely to provide unpaid care for others than their male counterparts.
“As a result, men’s pension pots grow by an average of £90,000 more than women’s between the ages of 50 to 64. This is particularly worrying as women tend to live longer and often bear their own care costs.”
Taking on these unpaid duties mean women spend less time working in paid positions, which not only lowers their income but also their National Insurance contributions which then impacts their state pension entitlement.
Ms Savova added: “Low earnings also limit womens’ potential to receive government incentives for saving, such as pension tax relief and Auto-Enrolment, throughout their careers.”
To help women get more out of their hard earned money when the data is stacked against them, Ms Savova shared some of her best tips for pension pots.
She said: “One way women can try and boost their retirement savings is by consolidating any existing pensions into one pot, which can have a noticeable effect on their eventual pension income.
“Not only does this avoid them losing out on any hard-earned savings, it means they only have to pay one set of fees, rather than multiple fees for various pots, which can erode a pension’s value over time.”
As pension investments compound interest, time is of the essence to ensure the pot grows enough to be liveable in one’s later years.
Because of this Ms Savova advised: “Leaving a pension invested for just a few years longer can dramatically increase a retirement income. While everyone can legally access their personal and workplace pensions from the age of 55 (57 from 2028), it doesn’t mean they always should, particularly in periods of high inflation.”
She concluded: “Before committing to retiring, women should carefully consider if they have any other sources of income besides their pension, and how long they anticipate it to last.”