Studies have shown that women are more likely to take a steady, long-term approach to finances, while men are more likely to engage in risky investment strategies and to avoid seeking professional advice. This means that despite the fact that women still earn less than their male counterparts, Halifax research in 2013 found that on average, women have around £500 more in savings than men. Apparently, men’s higher testosterone levels could explain their more impulsive approach to money and investment.
More women saving for retirement
Reports from the US have also shown that American women are more likely to be enrolled in a defined contribution employer-backed pension scheme than men are, which supports the idea that women are thinking more seriously about long-term goals and financial stability. Of course, women also have longer life expectancies than men, so they’re facing lengthier retirements.
Women worse off at retirement
But despite the fact that women may be better at saving and planning for their financial futures, they’re still more likely to face a financial struggle when they get to pension age. Because there’s still a gender pay gap, and because women are more likely to take time out to have children and bring up families, female pensioners often have less money in their pension pots and are eligible for a lower level of state pension.
Office for National Statistics (ONS) data in 2013 showed that 80% of male pensioners were receiving the full amount of state pension, while less than 50% of women were getting the same. The amount of state pension you receive depends on the National Insurance contributions you’ve made over your lifetime, so women who have spent time out of the workforce tend to lose out.
Planning for your pension
Whether you’re a man or a woman, and whether you’re a sensible planner or a hasty risk-taker, there are things you can to increase your chances of a comfortable retirement. Firstly, the sooner you start a pension the better, as you’ll have longer to save money and you can afford to make lower annual contributions than if you start later in life. Secondly, bear in mind that the more you contribute, the more the government will give you in tax relief, and possibly the more your employer will give you if they offer ‘contribution matching’. Finally, it’s sensible to keep a close eye on how your money is being invested and to make changes if necessary. You should seek professional financial advice if you need any help with making decisions about your pension funds.