Startling statistics around money has been circulating the web recently. We all know that we should be preparing for the future but many of us just aren’t putting plans into action.
Two out of five millennials have no pension provision whatsoever, and one in five spend 60% of their monthly income on payday.
It seems that there’s barely enough to live on, never mind getting started with a savings fund or pension scheme. And with the housing market still an impenetrable force for thousands of young people, many of them will still be renting when they reach retirement age which could potentially double living costs.
To make things worse, women are much more likely to struggle with money when it comes to savings and pensions because of expectations to stay home and attend to family life instead of working full time. Workplace limitations also play a part in forcing women to take career breaks or give up work entirely. Not only are women earning less (despite campaigns 78% of the biggest companies in Britain reporting a gap in favour of men) but they are saving less too. This means that when it comes to retirement women are likely to have an average of £51,000 whilst men have accumulated three times that amount at £156,000.
Sam Smethers, CEO of the Fawcett Society, said: “The shocking pensions gap that women experience is a result of a lifetime of income and workplace inequality. If we introduced a carer’s top-up for pension contributions and lowered the threshold so that more low paid women in part-time work could benefit, that could make a real difference.”
To add insult to injury, reports show that women are predicted to live 3.7 years longer than men. Women don’t need the same level of wealth as their male counterparts, they need more.
Statistics from last year show that 41% of women work part-time meaning that they earn less, whereas only 13% of men work on a part-time basis. The most common reason for working part-time is to balance family life and childcare, a responsibility that regularly falls on women instead of men.
The worrying aspect here is that part-time workers won’t necessarily benefit from the pension top-up scheme (there is a minimum threshold for automatic inclusion) but anyone can opt-in. Women can see 5% of their income saved, matched by a further 3% from employers, but they need to make the choice and act now to see the benefit in the long run.
There is also a common misconception that pensions are expensive, but the reality is that starting sooner rather than later means that women can put aside what they can afford and still reap the rewards.
If a woman invested just 1% extra from their salary – that’s roughly £35 a month on an average salary – they could close the gender pension gap.
Experts recommend starting by saving as little as £25 per month with the plan to increase this over time in line with your income.
In addition to cash savings, women could be making serious improvements to their wealth through investments. Historically, stocks have averaged an annualised return of 10%. That’s better than the average inflation rate of 3.2%. Yet women opened just 892,000 stocks and shares ISAs in the 2017-18 tax year compared to 1.1 million opened by men.
Whilst investing does pose risks, when practised in conjunction with regular savings it can significantly boost your future earnings. Stocks and shares aren’t just for men, and it’s so easy to access now that investments can be made online in minutes.
However hope is on the horizon, as conversations around female finances are gaining momentum thanks to experts speaking out in the media.
Social media has given women a platform to share money diaries, investment advice an even divulge salary figures in a bid to get equal pay. Podcasts and books around money are also now heavily marketed at women.
In an interview with the Guardian, Emilie Bellet who writes a weekly newsletter around finance said: “Historically, we have been managing the household finances but men have made the final decisions,” Bellet says. “We need to take a seat at the table and manage our own finances.”