Women must save £210 more a month to match men’s retirement

, Women must save £210 more a month to match men’s retirement, The Habari News
, Women must save £210 more a month to match men’s retirement, The Habari News

Women must save £210 more every month they work to ensure they have the same lifestyle as men in retirement, a report has found.

Pension provider Scottish Widows has said women need to nearly double how much they put away – from £285 to £495 – every month from their 20s until the day they retire to bridge an £185,000 savings gap.

The average woman in her 20s today will have a £250,000 pension by the time she retires age 68 – £100,000 less than the average man. That is despite women needing £85,000 more than men to cover the costs of a longer life span and higher care costs.

A 25-year-old man today will live to 86 while women can expect to reach age 89, according to the Office for National Statistics. One in four women who are 60 today will live to 94. Women must save an extra £50,000 to cover income for the additional years and will need £35,000 to pay for care as they spend 460 days in care homes on average, compared with just 100 days for men.

Jackie Leiper, of Scottish Widows, said: “Even if we close the gap between how much men and women have saved by the time they retire, true equality would not be achieved. Women need to fund a longer retirement and shell out more on care.”

, Women must save £210 more a month to match men’s retirement, The Habari News

Scottish Widows also called on the Government to legally enforce pensions are part of divorce settlements to help bridge the gap between men and women’s retirements. 

It said pensions should be included in financial settlement given they are typically a household’s second biggest asset, after property. Failure to do so leaves women far worse off as they often forgo their fair share. Last year, the number of divorcing couples who shared pensions dropped by a third and reached a 10-year low.

Women who leave work and raise a family end up paying via significantly smaller pension savings. Taking a five year break to raise children costs £65,000, according to AJ Bell, a stockbroker. If a mother took two years off and then worked three days a week, they would be £158,000 worse off than if they worked full time.

Which?, a consumer champion, called on the Government to contribute to the pensions of first-time mothers to address the growing gender gap.

The pandemic widened the gender pensions gap, after women bore the brunt of job losses, furlough and income reductions. Women were also more likely to take time out of work to care for children or elderly relatives.