It’s a worrying time for many people heading towards retirement, but for women, the financial picture is particularly bleak. A new report has revealed that a shocking 52% of women don’t think they’ll have enough money to last them through their retirement years.
This worrying trend is being fuelled by the cost of living crisis. Many women are struggling to make ends meet and are having to cut back on their essential spending, let alone saving for the future. In fact, 12% of working women have reduced their pension contributions in the last year, cutting back by an average of £173 per month. This is a huge blow to their long-term financial security.
A Widening Pension Gap
The report, from Fidelity International, paints a stark picture of the gender pension gap. On average, a woman’s pension pot is worth £42,600, while a man’s pot is worth a significantly higher £76,700. This means that women are facing a retirement income shortfall of nearly 45% compared to men.
The gap is particularly pronounced among younger adults, with men’s pension savings almost double that of women in the 18-34 age group. This is likely due to factors like career breaks for childcare and lower pay for women in many jobs.
The Power of Small Amounts
While the situation may seem daunting, Fidelity is encouraging women to take control of their financial future. They’ve launched a “Power of Small Amounts” online calculator that shows how even small changes to your pension contributions can make a big difference in the long run.
For example, a 45-year-old woman earning the average UK salary could increase her pension pot by £17,000 by simply adding 1% of her salary to her pension contributions. If she increases her contributions by 5%, her retirement pot could be £85,200 higher.
For younger savers, the impact is even more significant. A 25-year-old woman could boost her pension pot by £74,000 with a 1% increase in contributions, and by a whopping £370,200 with a 5% increase.