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The reality of income for retirees in the UK is shocking. While the average salary for over-60s in work is £25,480, average pension income is just £8,774, which means that the average retiree is having to survive on less than a third of their working income. That’s a big drop with many not expecting a significant corresponding drop in outgoings, and some with debts still to pay off in the form of mortgages, overdrafts and credit card debts. The situation is even worse for women.
Women are on the back foot throughout life when it comes to financial affairs. It is a well known fact that they get a raw deal in the workplace, earning less on average than a man in an equivalent role. Throw into the mix the fact that women are far more likely than men to take time off from work to have children or care for elderly relatives, thereby giving them fewer years during which to contribute to a retirement plan, and it is no surprise that the gender divide transfers from the workplace to retirement.
The average woman’s retirement income is up to 40% less that that of the average man : £6,580 compared to £10,967. Worse still, one fifth of women in the UK have no retirement fund within five years of retiring, which will leave them struggling to survive on the state pension alone.
How do you fancy your chances of living a comfortable retirement on £113.10 a week ? For many the only option is to continue working into their late 60s to increase their pension pots and minimise the number of years they will need to survive on it, on average four years longer than men.
There is a cautionary tale here. Women need to grasp the importance of saving for retirement and start doing something about it. Adept as we are at putting our family’s finances before our own, we often give precedence to financially supporting our children while relegating saving for retirement to the bottom of the priority list. Many of us also often assume that we will be cared for by our partners, but with two thirds of marriages predicted to end in divorce, it is inadvisable to rely solely on a partner’s pension.
So ladies, the message is if you don’t already have a savings plan for your retirement, start one right now! Even small contributions are better than none and will benefit from compounding. Review your savings on a regular basis to work out what they would translate to in retirement income. A financial planner can be the key to helping you work out where you need to be and how to get there and will ensure that you aren’t one of the unlucky ladies attempting to survive on £113.10 a week.