Helping Women close the Retirement Gap in 2025
by Beacon Wealth Management
As we reflect on International Women’s Day and its theme “Accelerate Action” it’s clear that progress towards gender equity must continue at full speed, and that includes financial security and retirement planning. Women today face a range of barriers that contribute to a gender retirement gap that leaves them with considerably smaller pension pots than men.
Understanding the Gender Retirement Gap
The disparity in pension savings between men and women begin early in a woman’s career. Research indicates that the pension gap starts at 16% from the outset of a woman’s working life (Legal & General), and it continues to widen over time. By the time women reach retirement, the average pension pot for a man is £84,205, but for women it’s £39,654, an almost 50% difference (Legal & General).
One key contributor to this imbalance is career breaks and caring responsibilities. Women are more likely to take time off or work part-time to care for children or ageing relatives. These interruptions reduce both earnings and the ability to consistently contribute to pensions.
Pay inequality is another factor, as women still earn less than men on average, leading to lower pension contributions and overall retirement savings.
Investment disparities also play a role, with fewer women engaging in investing. Only 26% of women hold a stocks and shares ISA compared to 45% of men (Schroders), which limits the potential for long-term wealth accumulation.
To get the full State Pension, 35 qualifying years of work are required. If women are taking a career gap to shoulder caring responsibilities, for example, they risk not qualifying for the full State Pension, unless they take advantage of credits such as carer credits or child benefit credits
The role of financial advice in closing the gap
Despite these challenges, the financial landscape is shifting. It is estimated that 60% of the UK’s wealth could be in the hands of women as early as this year (IFA Magazine). This wealth transfer, driven by factors such as women’s longer life expectancy and inheritance from baby boomer parents, presents a pivotal opportunity for women to take greater control of their finances.
One of the most encouraging trends we’ve observed is that more women are independently managing their financial planning. Whether single or in a relationship, women are increasingly seeking financial advice to ensure they can build, grow, and protect their wealth.
Sarah Misciali, a Chartered Wealth Manager for Beacon Wealth Management, states: “I am seeing more women than ever taking charge of their own finances. I welcome the opportunity of working with more women to achieve the best outcome for them.”
While the rate of financial planning enquiries from women is on the rise, there is still work to be done to close the gender retirement gap fully.
Steps women can take now to secure their financial future
Prioritise pension contributions: contribute as regularly as you can, even if you are working part-time. Making regular contributions and increasing them when returning to full-time work can help compensate for any gaps.
Keep track of your pensions: today, the average person changes jobs 12 times in their career (Forbes). Consolidate or manage your multiple pensions to maximise how much they can grow.
Fill in gaps in your National Insurance record: claiming certain credits can help fill in gaps in your National Insurance record you may have, for example, if you’ve been on maternity leave, to help you qualify for benefits like the State Pension.
You have until 5th April 2025 to cover shortfalls in your NI record, dating back to 2006.
Investing beyond pensions: investing through stocks and shares ISAs and other vehicles can further enhance long-term financial growth.
Planning for the unexpected: seeking financial advice ahead of or during major life transitions e.g. retirement, divorce, can help protect your financial interests.
By being aware of how the gender retirement gap could affect your financial future, and those of people you know, this will help you determine how to make up any shortfalls you may have experienced and prepare for the retirement you deserve.
Beacon Wealth Management helps people and businesses manage their finances and plan for their financial futures.
For more information, call 01480 869466, email info@beaconwealth.co.uk or visit www.beaconwm.co.uk.
Future fees may apply. Registered and regulated by the FCA No. 526604.