11 June 2021
A crisis of confidence for women saving for retirement – another casualty of the pandemic
The following blog, by Council CEO Jim Boyd, first appeared on the International Longevity Centre’s website.
The tragedy of Covid-19 has highlighted many inequalities in our society.
We all recognise that women have had poor retirement outcomes, with the latest research from Scottish Widows finding that the average woman in her 20s can expect to save £100,000 less than a man of the same age over their working life.
This inequality is driven by women often having less well-paid jobs, part-time working (women form the majority of part-time workers) and the responsibility for family care provision falling disproportionately on women, forcing them out of the workforce.
However, Covid-19 reveals another side to this inequality. A crisis of confidence where the burden falls more heavily on women.
The Equity Release Council’s recent report (1) – seeking to explore gender differences in retirement planning and the impact of the pandemic on confidence levels – found that the proportion of homeowners aged 55+ worried about running out of money in retirement had increased to over a third (34%), up from 27% a year earlier. Of this group, women still working were the most anxious with 48% of women over 55 worried versus 32% of men.
Women also feel less in control of their own destiny with less than half (41%) confident that they will be able to afford to choose when they retire versus the majority (56%) of men.
To add to this, more than one in 10 (12%) women aged 55 + have stopped saving altogether as a result of the pandemic while 10% of women are also having to use up some of their existing savings to support themselves through this difficult period.
Sadly, women are also the least likely to consider alternative funding options to plug the gap.
More has to be done to support women to engage and better understand the choices available to them. The challenge to do this not only requires better policy development and better engagement, employers and the financial services industry can also play a part.
Good policy development, like auto-enrolment, does make a significant difference. According to Scottish Widows, the proportion of women saving adequately has increased in recent years, reaching 59% in 2020. However, many are still not saving enough.
This highlights a need for better engagement to foster greater confidence for women in the workplace and in talking about money more broadly, all of which will contribute to awareness of the need for greater levels of retirement saving. Enlighted employers are seeking opportunities to do this, and others should follow if they want to attract and retain talented people.
The best time to support the conversation about retirement must be during people’s working lives when they are still able to accumulate wealth and make choices about savings rather than wait until it is too close to, or at retirement.
It was heartening to hear Pensions Minister Guy Opperman MP’s recent announcement of grants to fund local enterprise schemes develop and implement ‘mid-life MOT’ financial resilience programmes to help savers make more informed choices. These schemes are not just about retirement savings, but also about enabling people to enjoy a fuller working life by helping them understand the skills they will need to learn along the way. Exactly the constructive policy initiatives we need.
The financial services industry can also do more.
Women must be given a distinct focus when advising married couples on retirement. Women must be supported and heard when making joint decisions within a couple given their longer average life expectancies.
Also, the industry must do more to ensure their advice provision is diverse to reflect gender diversity among their clients and accelerate its focus on recruiting and training more female advisers.
Finally, for women who are seeking to retire but lack sufficient retirement savings, we must support them in the immediate term to navigate their way to achieving a comfortable retirement. At the point of retirement, it is important that advice and guidance ensures all assets are considered for retirement, including property wealth, which for many constitutes their largest financial asset. We need a holistic approach to retirement. The industry must work with policymakers to facilitate this.
These are of course, only small steps. Although the tragedy of COVID still rests with us, hopefully it will act as a spur to addressing the inequalities it has brought to our attention.