Young women need to save an extra £185K to reach the same retirement income as men - Ten Financial Planning
Women will need £100k to bridge the savings gap, another £50k to cover longer life expectancy
and £35k to pay for associated care needs
This double whammy means saving £210 more a month from age 25 until the day they retire
Young women will need to save an average of £185,000 more during their working life to enjoy the same retirement income as men, according to the latest Scottish Widows Women & Retirement Report. The colossal gender pension gap is made up of a savings shortfall, plus the need to fund a longer retirement because women on average live longer than men. This also leads to higher care costs.
The 2021 report, which has been running annually since 2006, reveals that women currently in their 20s will have only saved around £250,000 by the time they retire. Men on the other hand will have closer to £350,000 on average. Added to this, a 25-year-old man today will live to 86 based on current estimates, while a woman can be expected to reach the age of 89. With women living three years longer than men, the average woman will need £400,000 in her pension pot to achieve the same level of retirement income as a man with £350,000.
Rather than being a worst-case scenario, there is a large range within life expectancies that mean women may need even more savings. One in four women who are 60 today will live to be 94 and one in 10 will live to 98. That is seven to 11 additional years beyond the average life expectancy.
With longer lives comes a greater need for care in older age. Estimates suggest women spend on average 460 days in care homes, while men spend just 100. With the average cost of care £679 per week, this means women can expect to spend £35,000 more than men.
Overall, this means women need to save an extra £185,000 to achieve the same retirement lifestyle as a man. This would require saving an extra £2,500 per year, or £210 every month, from their mid20s until the day they retire.
This year’s Women & Retirement Report also revealed that the same proportion of men and women are now saving enough for a comfortable retirement (61%) for the first time on record. In 2007, the Adequate Savings Index recorded its widest gap ever, with 54% of men saving adequately versus 41% of women. In 2021 that gap has closed completely, with three out of five men and women (61%) putting away the recommended minimum of 12%.
Source – https://adviser.scottishwidows.co.uk/assets/literature/docs/women-retirement-report-2021-press-release.pdf
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