Much like the gender pay gap, there is also a notable inequality in the retirement savings between men and women. What steps can women take to bridge the gender pension gap?
In this video, financial journalist MOIRA O'NEILL explores the reasons why women tend to have less retirement income than men. She also looks at the practical steps women can take to start saving earlier and more effectively for the future selves.
Robin Powell: Most of us are familiar with the gender pay gap — the fact that women are often paid less than men for doing the same job. But another example of inequality that receives less attention is the gender pension gap. On average, women have substantially less money saved for retirement than men. So why is that?
Moira O'Neill: Women just don’t have as much retirement income as men, and there are all sorts of reasons for this. One is there may be a difference in attitudes to saving and investing; another difference is the pay gap, which has an impact on retirement income. So, women earning less than men during their careers. And another key difference is that women tend to pick up the bulk of childcare responsibilities or caring responsibilities, which can mean they are reducing their work or they’re out of the workforce for a period, and they have those gaps to make up.
RP: It’s important that everyone starts investing for retirement as early as possible, and ensures they’re investing enough. But, says Moira O’Neill, it’s essential that women do.
MO: When I have interviewed women who are in their fifties, and I’ve asked them about what regrets do you have? About what you might have done differently, early in life in terms of finances; they’ve said to me: “I wish I’d started a pension. I wish I’d started a long term savings plan of my own. I wish I hadn’t been reliant on my husband or partner for a retirement income,” one said, “I wish I’d just looked at a long term graph of the stock market, so I could have seen what it might do for me. And that might have been,” she said, “the kick up the backside I needed to start investing.”
RP: Women often make big sacrifices for their families. But Moira’s advice to women is simple: don’t neglect your own financial security.
MO: Women might want to save for the children, they might want to save for family holidays, they might want to prioritise having a good lifestyle now and a good family lifestyle now. And they may not think about the future in so great detail, but I think they need themselves first. We need to put ourselves first. The children won’t want to see you living an impoverished lifestyle in retirement, that’s the last thing they’re going to want for their mother.
RP: Young women, of course, often have other commitments, like paying off student loans, or saving for a deposit on a house. They also want to enjoy life. Moira has two suggestions for them. First, don’t rush into making unnecessary purchases. Secondly, think of money in terms of the hours you have to work to earn it.
MO: If money is converted into time, it becomes much more precious a commodity. And so you need to therefore think about that pair of shoes – do I really want to buy it, if I’ve spent two days working for it? Or that amazing handbag, is it really worth a month of my work?
RP: Ultimately, there’s a balance to strike between spending now and saving for the future. But the earlier women think about it the better.