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Although the latest figures show that the growth of life expectancy is slowing, women are living longer than ever. That is, of course, a great thing. But what are the implications of womens health and longevity when it comes to planning for retirement?

The latest Office for National Statistics (ONS) figures show that the average life expectancy for women is 83.1 years. This is undoubtedly positive in terms of enjoying life, friends and family, but it also means our pensions need to last longer.

But research shows that women typically retire with pensions worth just a fraction of mens. The reasons are, of course, varied, but it often comes down to issues like maternity leave, career breaks to care for family and being in lower paid jobs to start with.

But regardless of the whys and wherefores, the effect on our finances can be detrimental to say the least.

Talking about the link between womens health and financial outlook, Sharon Bonfield, Commercial Research Specialist at St Jamess Place Wealth Management, says:

Women typically live longer than men and may have a smaller pension pot, they need to plan accordingly to make their money last. While longevity sounds like a blessing, we wouldnt want to be unwell and struggling financially during our later-life years. But many women run the risk that this will be their future. A 40-year-old woman has a one in four chance of living to age 96, and a one in ten chance of living to 100.

Women not only need their pensions to last longer, they also generally have smaller pension pots to use during these extra years of life. We already know that women typically retire with one-fifth of the pension wealth of men. New analysis from the Centre for Economics and Business Research found that, when life expectancy is taken into account, the gender pensions gap could be as much as 108,130 for single women, and 186,120 for women who are married or in a relationship.

What you need depends on your lifestyle. To get an idea of whats enough, the Retirement Living Standards were developed. Based on independent research by Loughborough University, the standards suggest the amount we might need based on levels of comfort. The figures below are for singles not in a relationship.

Retirement Living Standards suggests singles will need at least 10,200 a year to live on. If they live in London, this goes up to 12,400.

This should work out enough to cover household bills, including DIY and maintenance. It also allows for a modest weekly shop (38), holidaying in the UK and enough for clothes, shoes and gifts. Crucially, it doesnt include maintaining a car, which for many singles can be a necessity.

The forecast here is 20,200 per year, or 24,100 in London. This allows for an increased budget in all areas and includes two weeks worth of European holidays. It also includes a 3-year-old car.

To live comfortably, the estimate is 33,000, going up to 36,300 in London. This level of annual income provides much greater freedom and a lot more comfort. It allows for a new kitchen and bathroom every 10-15 years and 3 weeks in Europe. Theres also enough for a newer car which can be replaced every five years.

If these figures have left you feeling a little discouraged, dont fret. There are things you can do right now to ensure a stress-free retirement. Sharon Bonfield offers this reassurance:

Luckily, there are things all women can do to increase your chances of a financially secure life, however long you live. If you do nothing else, have a think about what you want your future to look like. Do an appraisal of all your long-term savings plans, rounding up any small savings pots you may have forgotten about over time. Sit down and have a chat with a financial adviser to see how things are actually looking for your retirement years.

The most important thing is to not bury your head in the sand. After all, womens health and longevity should always be viewed positively rather than as a financial albatross.

The first step is to do your homework, which could mean getting to grips with understanding how pensions work in the first place and what you might already have. And as Sharon advises, think about what you want your future to look like. For example, have you considered early retirement?

Finally, professional help is always a wise investment, but its important to seek the right help. Our guide can point you in the right direction when it comes to choosing a financial advisor.

If youre looking for more ways to make your money work for you, why not sign up for MyWalletHeros email newsletter? Youll receive our teams top money-saving tips, lifestyle hacks and handy personal finance must-knows delivered straight to your inbox

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This entry was posted on November 12, 2020 at 11:56 pm and is filed under Longevity. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed. |