Women's health, wealth and longevity - a retirement triple-threat

Because women typically live longer than men and may have a smaller pension pot, they need to plan accordingly to make their money last.

While longevity sounds like a blessing, we wouldn’t want to be unwell and struggling financially during our later-life years. But many women run the risk that this will be their future. Not because they’ve got the ‘right genes’ or live a super-healthy lifestyle: it’s simply because they were born a woman.

A 40-year-old woman has a one in four chance of living to age 96, and a one in ten chance of living to 100.1 Better healthcare and positive lifestyle changes have helped to raise life expectancies across the board, but women still are likely to live longer than men. And with several studies finding that more men than women have died from COVID-19, the life expectancy gap could widen further from here.

The gender pension gulf 

Women not only need their pensions to last longer, they also generally have smaller pension pots to use during these extra years of life. We already know that women typically retire with one-fifth of the pension wealth of men.2 New analysis from the Centre for Economics and Business Research found that, when life expectancy is taken into account, the gender pensions gap could be as much as £108,130 for single women, and £186,120 for women who are married or in a relationship.3

Because they tend to live longer, women are more likely to end up in single-person households later in life. This could add further to their financial pressures because it can be much more expensive to run a household of one, covering all bills alone.

Will you be healthy enough to work longer?

Adding to this, the State Pension age is rising, which means many people who will rely on this government payment will have to work longer before they can claim it. Plus, there’s no guarantee your health will support you working into your later years.

Some women may have taken their first job at 16. If you’re planning on working until your late 60s or early 70s, that’s a lot of years in the workforce – you might well be feeling burnt out or struggling with health issues. As early as your mid-40s or early 50s, you could be suffering from symptoms of the menopause, such as ‘brain fog’, which can make it tough for some women to continue working at the pace they once did.

You may want to drop to part-time hours or get a job with less responsibility to take some of the pressure off, even if it just for a few years. But will you be able to afford it?

Same-sex couples face triple whammy

For women in same-sex relationships, they may think that their joint longevity will give them a long and happy retirement together. But in fact they could face a triple whammy of challenges: both partners might take a period of maternity leave that could impact their earning power and pension contributions, both may need to work longer, and both may suffer from health conditions over their long lives.

Luckily, there are things all women can do to increase your chances of a financially secure life, however long you live. If you do nothing else, have a think about what you want your future to look like. Do an appraisal of all your long-term savings plans, rounding up any small savings pots you may have forgotten about over time. Sit down and have a chat with a financial adviser to see how things are actually looking for your retirement years. Taking into account the money you’ve already saved, and your capacity to save over the coming years, an adviser can model a likely outcome.

You may find that you can retire sooner than you think or can slow down your working pace as you near retirement if you come up with a sensible plan now. Take charge today and speak to your St. James’s Place Partner for help with your finances.

1ONS life expectancy calculator, accessed 7 September 2020
2Securing the Financial Future of the Next Generation, Insuring Women’s Futures and Chartered Insurance Institute, 2018
3Centre for Economics and Business Research, September 2020

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray Financial Management

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