How women can build retirement wealth

Unbiased’s CCO, Nihal Pekbeken, talks about the challenges women face when saving for retirement and why it’s never too late to make a difference

When it comes to building sufficient retirement wealth, women face numerous challenges. 

Chief among them is that - due to factors such as the gender pay gap and taking time off work to raise children - their lifetime earnings tend to be lower than their male counterparts, offering less scope to tuck money away for later life. 

The latest retirement data from Aviva, published in January 2023, shone a bright light on the problems women are experiencing.

Aviva found that women aged 60 to 65 years old have pension pots which are on average just over half (57 per cent) the size of men’s pots at the same age. 

I’m sure you’ll agree that this imbalance, known as the gender pensions gap, is deeply worrying. And there are several reasons why it exists. 

First, many women in their 50s commonly form part of what’s been called the ‘sandwich generation’. These are those who are ‘sandwiched’ between raising children and looking after elderly relatives. And while this group comprises both genders, women typically bear the load.  

Women in the sandwich generation often take extended periods out of the workplace, causing their earnings and careers to suffer.  

Second, divorcees often face a unique set of challenges. While pensions form part of the marital assets during divorce, it’s not always shared equally. Sometimes women keep the house but little else. In absence of further pension funding, women can end up asset rich but cash poor in retirement.  

And last, when you factor in the impact that menopausal symptoms can play in forcing some women to reduce their hours or stop work altogether, it’s easy to see why many women miss out on important pension savings at a key stage in their life. 

However, regardless of how old you are and the size of your retirement pot, it’s never too late to make a difference. In fact, during your 50s your capacity for pension saving might be at its greatest, especially if your children have flown the nest and are no longer financial dependent on you. What's more, with any luck your mortgage payments will be less of burden, freeing up more money for you to allocate towards your financial goals.  

Here I offer women four top tips for growing their pension wealth: 

1. Make financial education a priority and take control of your pension: there is an archaic presumption that women don’t understand their finances as well as men. An incredible amount of financial information is available on sites such as Unbiased, which busts jargon and helps women become more confident in making financial decisions. Take the time to read about financial trends and behaviours, and if you need that extra help to get your pension plan on track, look to get financial advice from a regulated adviser. 
2. Even small contributions can make a big difference over time: take action now and add as much as possible to your retirement savings or workplace pension in order to take advantage of government tax relief. 
3. Negotiate your salary: women must become bolder in negotiating their salary, especially if they believe they are not being rewarded for what they are contributing to their current employer. This is much less effort than the alternative — moving jobs to get a pay increase. And never apologise for asking! 
4. Try to stay in work longer: if you want to increase your pension pot then you may need to consider adjusting your retirement plans and delay the date that you start taking your pension income. This means that you can then continue contributing for longer.  

Making up for lost time is far from easy, but the sooner you can get started, the better, as you’ll have more time for your money to grow. 

And don’t be afraid to seek expert help from a regulated adviser if you need it.