The age that a person chooses to end their working life will largely come down to their personal preference and financial situation. However, it’s only upon reaching state pension age when those eligible will be able to claim their state pension. The state pension age is currently rising, with the age due to reach 66 in October 2020, according to government plans. A new survey has taken a closer look at the current state of the UK’s pension pots – finding that women face the prospect of outliving their savings by an average of 16 years.
Meanwhile, the research suggests that men may have a retirement funding shortfall of 10 years on average.
According to the study, which uses data from Vitality’s “Your Vitality Future Calculator” survey and features 6,002 respondents, the gap could mean that some women could be at risk of pension poverty – unless they fail to make changes to how they save for retirement now.
The figures are based on the assumption of each participant requiring an average yearly income of £27,000 during their retirement – and does not include income that may be received from the Basic State pension.
Vitality said that women who responded to the survey said that they had stated the desire to retire at the average of 63.
Hilary Banks, Director at Vitality Invest said: “The Your Vitality Future Calculator throws into sharp relief the pension deficit the nation is facing with women.
“Our data shows that whilst men face a ten year pension deficit, women face a significantly greater deficit of 16 years.
“Shockingly, this means that women will need to work for considerably longer than they would like in order to have enough money to fund their retirement.”
She continued: “Women are particularly impacted because they have a longer life expectancy and may take time out of their career to raise children or elderly relatives.
“Teamed with the issue of the gender pay gap, the end result is that women accumulate a significantly smaller pension pot for retirement.
“But factors impacting both women’s and men’s savings include the tendency to be over-optimistic about the future and to prioritise today over tomorrow, favouring ‘smaller-sooner’ treats over ‘larger-later’ rewards.
“This is the same behaviour that keeps people from eating healthily, quitting smoking or exercising.
“When all this is coupled with an incorrect belief among people that they will spend less in retirement, the conditions are set for people to have to either work longer, or face the harsh reality of running out of retirement cash.
“These behaviours are why, at Vitality, we provide rewards for both good health and savings actions along with nudges to help people down the path to build up the kind of savings they’ll need to fund their retirement.”
Earlier this month, research by the Pension Policy Institute highlighted how the average women in her 60s is £106,000 worse-off in terms of pension wealth compared to a man of the same age.
The Facing an unequal future – Closing the gender pensions gap report, commissioned by NOW: Pensions, said that as women tend to live 3.7 years longer than men, they would need to save around five to seven per cent more in order to draw the same pension income throughout their retired life.