Planning for the future can often take a backseat in the minds of clients who will instead choose to invest in things that are more tangible. However, making plans sooner rather than later can be beneficial in the long run and can give clients peace of mind when the “future” eventually comes around. Although statistics have focused on women falling short of men when it comes to retirement planning, the proportion of both genders making arrangements for their futures remains relatively low.
Since 2014, the savings gap between men and women has widened, meaning part-time and self-employed women are left increasingly vulnerable.
According to Scottish Widows Research, 52% of women are saving adequately for their retirement in comparison to the 60% of men. Although the proportions have risen from 2014 by 2% and 5% respectively, there is still a substantial gap between the level of men and women saving.
Among women, levels of pessimism are also higher, with 57% concerned their retirement preparation is inadequate, compared to the lesser 41% of men.
The research also indicates that for women, the ability to save for retirement appears to be hindered by shifting employment patterns. The number of women who are self-employed has grown 22% in four years – almost twice the growth rate of self-employed men – and is now near 1.5 million within the UK.
36% of these women are saving an adequate amount for retirement compared to the 47% proportion of self-employed men. For women who are employed generally, this figure is 58%.
The majority of self-employed women (62%) feel they don’t believe they will be able to save any more in the next 12 months in comparison with 46% of self-employed men. This indicates that the gendered divide for saving is likely to continue.
Women working part-time – currently 16% – may also risk exposure in regards to retirement saving. Despite the number of women working more than one job is double that of men (6% versus 3%), they are still failing to qualify for automatic enrolment as the money earned from each is less than the threshold of £10,000.
In regards to those saving adequately after a divorce, only 42% women reach the mark compared with 47% of men. This indicates that personal circumstances also seem to impact women to a greater degree.
Least optimistic about their retirement are younger women, those aged 18 – 29. Of this bracket, only 18% felt positive in comparison to 25% of men. If they were provided with better access to pensions and retirement planning information, 33% of 18 to 21-year-old women stated they would be encouraged to save. Ability to view pension saving alongside other savings via an app or online would also make saving more appealing to 42% of women aged 22-29.
This age group also stated that being automatically enrolled would urge them to begin contributing to a pension in comparison with 29% of men.
Commenting on the growing need to address the gender savings gap was Jackie Leiper. The retirement expert at Scottish Widows expressed the need for awareness around retirement saving in order for women to prepare for their future: “It is encouraging to see that over half of women are making sufficient savings towards their retirement, but a growing savings gap persists in the UK. It’s vital that we address this to ensure women feel reassured about their finances and prepared for retirement, whether they are self-employed, work for a large employer, are divorced, married or single.
“More also needs to be done to make certain that automatic enrolment does not marginalise female savers who may not qualify for the threshold. And this means we need to engage innovatively with female millennial savers, who are just beginning to put money aside for their retirement. Our research shows they are crying out for information, and learning good savings habits now will help ensure they are better prepared for later life. Providers, employers and the government alike must also explore further initiatives to help women of all ages save in other ways if they don’t qualify for a workplace pension.”
According to research from unbiased.co.uk, around 59% of the UK adult population are without wills, indicating that the lack of preparation spans across future planning as a whole. In relation to retirement arrangements, the youngest age group believe greater availability and access to information would encourage them to save. Using this principle, it is likely that increasing awareness of planning for the future in relation to pensions and wills as well as retirement, would enable clients to be more adequately prepared. Establishing the importance of these causes from an earlier age may encourage greater recognition of financial planning and increase awareness of its long-term benefits.
