Women are still not saving as much as men for retirement, with the retirement savings gap remaining largely unchanged from last year.
Research conducted by Jelf: LaterLife has found that 49% of female workers believe they do not have enough saved for retirement compared to 40% of men.
We asked 1,000 employed people over 55 a series of questions about their retirement planning. Some key findings from the research showed that in general people are still not planning enough for retirement, with less than a third saying they had enough money saved for retirement.
Why aren’t women saving as much as men?
Findings from the Scottish Widows’ Women and Retirement Report (2016) suggest that women do not see saving for retirement as a priority. This could be because family demands still tend to be the responsibility of women; meaning their working patterns are disrupted over longer periods of time and other savings are likely to be priorities. Family responsibilities may also mean that more women are working part time, and so have less money to save. There is an argument for the gender pay gap causing this discrepancy; however the pay gap is in fact at its lowest level ever.
Our research also shows that it’s not necessarily a lack of knowledge that’s stopping women from saving. When asked if they were confident they understood how to access their pension savings 56% of women agreed (compared to 68% of men). Although there’s still a gap here, it’s still positive to see that over half of the women surveyed were confident about this.
So if it’s not a lack of understanding about how, it could be a lack of understanding about how much. In general less than a third of employees knew exactly how much money they needed for retirement. Again, there’s a discrepancy between men and women here with 27% of women and 36% of men knowing exactly how much they need. It seems that there is a general lack of confidence in women about their pension savings – they could be saving the same as men but just believe it is not enough.
Why don’t we know how much we’ll need in retirement?
It’s clear that in general people aren’t saving enough for retirement and this could be due to other financial responsibilities. However, our research indicates that it could be due to a lack of thought around what people intend to do in retirement. Many individuals think about how much they might need in retirement without considering what lifestyle they are going to lead. The sooner they start to plan this, the sooner they have a rough figure to aim for and therefore they will know how much to save.
When people think about retirement, what they think about is their finances. This is reflected in our research that shows 57% of people had considered their finances when thinking about retirement, and this was the most important aspect of retirement for both men and women. In fact, for the various aspects of lifestyle that we asked about, the consideration and importance for both men and women was largely the same across every area. What we consider to be lifestyle aspects of retirement are things like: hobbies; leisure; travel; health; relationships; continuing education. Interestingly the shift of focus from finances to lifestyle occurs with increasing age.
We believe that employees need to be offered the time and the opportunity to consider their life in retirement so that they can plan fully and ensure that they make the most of their later life. And as an employer you are well-placed to be able to offer this opportunity. Read more about this in our post on employers and retirement support.