HOW MUCH INCOME WILL YOU NEED FOR A COMFORTABLE RETIREMENT?

Almost a quarter (23%) of women in their 20s (aged 22-29 years) would be frustrated if they couldn’t retire by the age of 60, according to new research [1]. Despite this, 10% of this group have opted out of their employer’s pension scheme, further risking their chances of retiring when they plan to.

Additionally, 35% don’t know how much income they would need for a comfortable retirement, and nearly two in three (62%) young women are concerned about completely running out of money in retirement.

MISSED OPPORTUNITIES FOR EARLY SAVINGS

Despite the clear uncertainty about their futures, the research highlights that younger women are missing out on making a significant early difference. While 19% of men start paying into their pension by age 22, just 14% of women do so, signalling a clear opportunity for more young women to start saving for a pension from an early age.

Of those who opted out of being automatically enrolled into their employer’s pension scheme, 29% said it was because they couldn’t afford to keep up regular pension contributions, and 14% said they would prefer to spend the money now. In fact, women are saving less than men towards an employer pension at nearly every point in their lives.

THE GROWING PENSION GAP

Acting early is key, given that the pension gap also grows with age. The difference between the pension values of men and women is 10% at the age of 25 and 50% by age 50. The research shows a significant gap between women’s expectations and the actions taken to meet those expectations.

Alarmingly, 10% have opted out of their workplace pension, meaning they are missing out on compound interest gains and, crucially, the ‘free money’ that comes with employer pension contributions.

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Source data:

[1] The research was conducted online by YouGov on 5,072 nationally representative respondents in the UK between 21/03/2023 – 05/04/2023. A further survey of 1,352 ethnic minorities in the UK took place between 21/03/2023 – 06/04/2023.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESS BLE UNT L AGE 55 (57 FROM APR L 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.