The gender pay gap is well documented but there is another gender gap that attracts far less attention: the gender pension gap. As large numbers of women face poverty in retirement, it is even more important than ever to address this issue and promote financial independence for all.
Retirement planning: the gender pension gap
While women enjoy longer retirements than men due to higher life expectancy, they are retiring with far smaller pensions. In the UK, women’s pension pots are, on average, one-third that of men’s, with a shocking 42% of women in the UK currently facing poverty in retirement.
According to the 2024 Women and Retirement Report from Scottish Widows, the average retired woman will struggle to survive on an income of just £12,000 a year, significantly less than the £14,400 minimum retirement income recommended by the Pensions and Lifetime Savings Association. The average retirement income for a man is £17,000.
The importance of financial independence for women
And poverty isn’t the only problem for women who lack financial means. Brexit campaigner and philanthropist, Gina Miller, recently revealed that one in three women feel trapped in a relationship or situation due to a lack of financial independence.
That’s a lot of women struggling in unhealthy, or even abusive, relationships because they are financially dependent on men.
Closing the gender pension gap is one way we can tackle this, although sadly this remains a distant dream. Jackie Leiper, Managing Director of Scottish Widows highlighted just how distant saying ‘Progress has been made on the gender pension gap over the last two decades thanks to game-changing interventions like auto-enrolment and improving equality on women’s pay and role in society. But we are still a long way from where we need to be. Without drastic action, the gender gap will take another 20 years to close, and there is a very real risk that we won’t see pension parity for many generations to come.’
While all this paints a rather bleak picture, individuals can take active steps to improve their own financial independence and secure a comfortable retirement, and this is what we at Infinity encourage women to do.
How to achieve financial independence in retirement
Be financially involved
Not knowing their household’s financial situation is a huge misstep many women make when they are in committed relationships. If they subsequently find themselves single, the challenges can be daunting. This becomes even more problematic in cases of acrimonious separation or divorce, where the partner with more financial knowledge holds significant power.
The solution is to get involved—ensure you know where your household’s money comes from, where it goes, and how it is managed. Familiarise yourself with bank accounts, investment portfolios, loans, insurance policies, and any other financial obligations or assets. Participate actively in financial planning discussions, and don’t hesitate to ask questions or seek professional advice to understand the bigger picture.
Be financially autonomous
When it comes to retirement, a man is not a plan. Financial autonomy is important, although achieving this if you are in a relationship can be a tricky balance to strike. Communication and proactive planning are key.
While joint accounts are practical for shared expenses, each partner should also maintain their own personal account. This allows both individuals to retain control over some of their earnings and have access to funds for personal use.
Building and maintaining a credit score in your own name is also a good idea. You never know when you might need it.
Save for retirement
We strongly advise all women to start saving consistently into a private pension as early as possible in your career. The power of compounding over time is a crucial factor in growing your pension fund.
By maximising your contributions early on, you allow your savings to work harder for you, providing a strong financial foundation—even if you later decide to take a career break to raise a family, one major contributor to the gender pensions gap.
Actively manage your money
They say that women save while men invest, and statistics back this up. In the UK, only 38% of women invest outside of pensions, compared to 55% of men. Ladies, mind that third gap: the gender investment gap.
The two main reasons holding women back from investing are the misconception that investing is too risky and fear borne through lack of knowledge.
With regard to risk, while savings accounts may feel like a safe place to squirrel your cash, in reality, they often fail to outpace inflation. Over the long term, diversified investing is the best way to build wealth.
The solution to overcoming your perceived complexity of financial markets and lack of knowledge is working with a trustworthy, professional financial adviser who can help you address any misgivings you have about investing in stocks and shares. A good one will demystify the process, take the time to answer any questions you have, and offer easy-to-understand investment options matched to your tolerance to risk.
Retirement planning: assistance for women
Here at Infinity, we are passionate about fostering financial independence in women and playing a small part in closing the gender pension gap. We also love seeing women gain financial confidence and realise how truly transformative this process is.
If you’re a woman in Asia and you’re looking to invest to secure a comfortable retirement, click here to start your journey to financial independence.
A leading provider of expat financial services and wealth management services across Asia.
