Happy International Women’s Day!
Today, March 8th, we’re celebrating the social, economic, cultural and political achievements of women – and paying tribute to the trail blazers and glass-ceiling-breakers who paved an easier path for the females of today and tomorrow (let’s not forget, it was only 100 years ago that women were granted the right to vote…).
This year’s theme is #BalanceforBetter– a drive to create a more gender-balanced world. It’s a call to action that’s relevant in all fields of life – but particularly in the world of finance, where it seems there’s still much to do to balance the books in the favour of women.
The gender pay gap is a problem that’s well documented and uniformly challenged, as it rightly should be. But perhaps less well considered is the real-life impacts that it – and other factors – can have on women’s finances today and long into the future…
Take housing. One report from Compare My Move recently revealed that, due to lower average salaries, women have to save for almost two years longer than their male counterparts to get on the property ladder in London.
But housing may just be the tip of the iceberg. What about building a pension pot and paying your way in later life?
Planning for life after the office
For all of us, a comfortable retirement is probably our ultimate, if elusive goal. But for women, retirement is that little bit harder. According to the Financial Times, a woman aged 25 today, who pays the minimum contribution into a workplace pension over her lifetime, would find herself at retirement with a pension pot that’s 20% smaller than a man of the same age and same contribution.
And considering that women are still more likely to take a significant amount of time off work to start families, their pension contributions are likely to be smaller still. If a woman was to take a career break of five years, she’d end up with 33% less pension savings than that of a man who did the same thing.
What’s more, women are not benefiting from government pension schemes as much as men. The 2012 auto-enrolment policy for earners over £10,000 on the compulsory retirement savings plan does not extend to self-employed individuals, part-time workers (81% women), those with several different jobs, and low earners — and the majority of these sectors are made up of women.
Funding a longer life
All of the above becomes all the more important when you consider that women actually need a little more money in their back pocket when it comes to life after work.
Because if there’s one department where women come out on top, it’s life expectancy — precisely 2.5 years longer than men. That’s an extra 2.5 years of savings, on average, that women have to make up for during their lifetime; not to mention a longer period of expensive later-life care to fund — 19 years of a woman’s life will be spent in poor health, compared to 16 years of a man’s. (For any Russian couples out there, the picture’s even more stark – an extra 10 years of going it alone; the largest life expectancy gap across the globe!)
Where financial life planning comes into play
Considering the current financial climate for women, preparing for retirement and later life is about as important as it gets…and it shouldn’t be left to chance.
Luckily, the signs are that more and more women are taking the advice they need to ensure they’re on track to meet their goals. In the last year, the number of women seeking advice has increased by around a fifth for some advising firms, suggesting that the importance of later life planning is becoming a high priority for modern working women.
And rightly so. Because if there’s one for sure, when it comes to creating a more gender-balanced world, financial planning is a good place to start.