Retired women £6,400 worse off per year than men, finds study

Women entering retirement in 2017 will be £6,400 worse off a year on average than their male counterparts, according to a new survey which highlights a widening income gender gap among retirees.
A considerable income gap exists between male and female retirees a new study has found.A considerable income gap exists between male and female retirees a new study has found.
A considerable income gap exists between male and female retirees a new study has found.

New research shows that the financial gulf between the sexes has grown by £1,000 over the past 12 months, a sign of the continuing penalties faced by women who have chosen to take career breaks or alter their working patterns.

The survey, conducted by Prudential, found that a year ago, a woman retiring would have typically expected to be £5,300 worse off annually than a man preparing to give up work.

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Women planning to retire in 2017 expect to have a typical annual retirement income of £14,300. This is £200 less annually than the £14,500-a-year income that women retiring in 2016 were expecting to live on.

In stark contrast, men’s expected retirement incomes have been growing for five years in a row. A man retiring this year can expect to have £20,700 annually to live on typically, while a man retiring in 2016 had an average income of £19,800.

The retirement income gender gap is at its widest since 2014, when women retiring in that year typically expected to be £6,700 worse off than men annually.

Kirsty Anderson, a retirement income expert at Prudential, said: “The gender gap in retirement incomes continues to grow, probably reflecting the fact that many women will enter retirement having taken career breaks and changed their working patterns to look after dependants.

“Unfortunately, as a result, many women will end up with smaller personal pension pots and some are also likely to receive a reduced state pension.

“For anyone who takes a career break, maintaining pension contributions and, where possible, making voluntary national insurance contributions after returning to work, should help to minimise the impact on their retirement income.”

Last year a study conducted by the Pensions Policy Institute on behalf of the Trades Union Congress warned of a similar imbalance, finding that on average, women have around half the pension savings of men.

The average woman in a defined contribution scheme, it found, has just £7,500 saved for retirement, compared to £14,500 for men. For those in defined benefit (final salary) schemes, the typical woman has £32,000 in contrast to men who have £62,900.

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Ms Anderson said that she did not expect the historic imbalance would be so pronounced in years to come, thanks to the shifting employment market.

She explained: “With a greater number of women staying in the workforce for longer these days, and employers increasingly offering more flexible working patterns, the outlook looks more positive for women’s retirement incomes in the future.”

Some 1,000 people planning to retire in 2017 took part in the Prudential survey.

It comes as a new report found that seven in ten young pension savers risk heading for a cash shortfall in their retirement.

People aged 22 to 29 years old typically expect to need an annual income of just over £23,000 for a comfortable retirement, a survey from Scottish Widows found.

But based on the amounts people in this age group said they were saving, the insurer calculated they could face an average shortfall of around £8,000 per year, as they could typically expect to end up with a yearly income of £15,200.

More than a third (37 per cent) of those aged 22 to 29 years old said student loans were eating into their monthly pay cheques, while 21 per cent had unpaid credit card bills.

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