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Despite the great social changes over the past century of women’s role in society, one area that has not kept pace is that of retirement savings. It is a paradox that while women have gained equality in virtually every area of life and society, many neglect to plan their own retirement often relying on their husband’s retirement provision to care for them in their senior years.
The Daily Telegraph recently published the findings of the Scottish Widow’s 2012 Pensions Report which surveyed 5200 adults in the UK. The report found that less than one fifth of women were confident their savings would last through their retirement compared to only a third of men. Overwhelmingly, the survey concluded that women were dependent on their partners.
However this retirement strategy is fraught with risk for women. Of the divorced women who took part in the survey, only 15% said their husband’s pension was considered as part of the settlement. With a third of marriages in Britain ending in divorce within 15 years, this leaves many women without any arrangements in place after a marriage ends and illustrates the precarious position that many women may find themselves in.
It is clear that in the modern world, women need to take matters into their own hands and start planning for their own retirement. Women need to start approaching the whole question of their retirement in exactly the same way as men; independently and as soon as possible at the start of their working life. By having their own pension plans and investments, they will have funds available for their retirement regardless of their marital situation.
However women in general face more difficulties than men in this regard. The obvious difference in retirement planning for women is that if they want a family they often take a career break to have children. Although it is becoming less common, women are far more likely than men to become full time homemakers and have no income to put aside for a pension. According to Wife.org men, on average, take one year out of the workforce while woman take an average of 10 years. This means that men are able to invest into their pensions for a full ten years more. Many women decide to exclusively be homemakers which mean they forgo a pensionable income completely.
The answer to these circumstances is to discuss joint pension arrangements with their partner. One of the revelations of the Scottish Widows survey was that 79% of women did not discuss pensions before getting married and startlingly, 78% did not know if they were entitled to their husband’s pension if they got divorced. This lack of awareness is not something that is sustainable if women are going to have a decent income after retirement. In cases where the husband is working and the wife is at home, there needs to be an understanding on what provision is made and between the couple on how a pension pot will be split in the event of divorce.
When it comes to later life and retirement, the most important thing for women is that they have a degree of control. This means making their own pension provision and fully understanding any joint pension provision with their husband. If you would like to discuss your retirement savings options get in touch and speak with one of our professional advisers for a free of charge consultation.