Scottish Widows finds that women face a £185,000 gap in retirement

Scottish Widows finds that women face a £185,000 gap in retirement

Frontier Economics have supported the publication with analysis of savings and retirement data and their implications.

The report found that the average woman in her 20’s could face a £185,000 gender gap in retirement. Factors contributing to this were varied with the most notable being:

  • Structural inequalities in working life are a key driver of the gap: the gender pay gap, lower savings rates, career breaks and more part-time work mean that the average woman might be on track to save £100,000 less than the average man.
  • While entering retirement with fewer assets, the average woman would in fact need more retirement savings than a man. This is because women can expect to live longer: an additional 3 years in retirement means that savings have to stretch further. To prepare for this, women would have to save nearly £50,000 more than men.
  • Women are also likely to need more care in later life, which could mean an additional £35,000 in care costs for those who need residential care.

It would not be easy for women to close this gap. To ensure a similar quality of life in retirement, women would have to save a significantly higher share of their already lower income than men do.

The issues described are wide-ranging and require a broad suite of policy reforms. The report discusses these in more detail: some immediate reform could help by raising retirement savings in general (such as changes to automatic enrolment); while deeper structural reform is needed to address the gender gap (e.g. around parental leave and childcare).

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