New research has found that, based on current pension withdrawal rates, women could empty their private pension savings by the age of 73 – 14 years before the average life expectancy of a 60-year-old woman
Financial services provider modelling indicates that women could deplete their pension pots 14 years too early, ten years before men.
The research, unveiled ahead of International Women’s Day on Saturday March 8, warns that current pension withdrawal rates could see women exhaust their private pension savings by the age of 73. Legal & General (L&G), the group behind the research, highlighted that with the average life expectancy of a 60-year-old UK woman at 87, some retirees may face a significant 14-year gap without private pension funds.
With the average life expectancy of a 60-year-old man in the UK at 85, men could have two years of retirement without any leftover private pension savings. Katharine Photiou, workplace savings managing director at L&G, pointed out the potential “lottery effect” that the ability to withdraw from pensions might trigger.
Still, she cuationed against spending: “What seems like financial freedom now might turn into uncertainty later.” The study uses ONS life expectancy data coupled with an Opinium survey of over 3,000 individuals aged 50 and up conducted in December 2024.
The calculations were based on various assumptions about inflation and investment returns, with the expectation that individuals would start making regular withdrawals from their private pension pot at 67 until it was depleted. It was also assumed that people had no other sources of income, such as property wealth or a guaranteed pension income based on someone’s salary.
In addition to this, individuals will be entitled to the state pension, the size of which depends on factors such as national insurance (NI) contributions. The research indicated that women typically withdraw less from their pension than men but have less money saved into it to start with, at £40,000 versus £87,500 for men.
Of those receiving income from an income drawdown pension, women are receiving £625 per month on average, compared with £875 for men. However, women were more likely than men to have increased their withdrawal rate since they first started making withdrawals. More than a quarter (27%) of women making withdrawals had increased their withdrawal rate, compared with less than a fifth (19%) of men.
The research was released alongside a survey of 2,000 people for savings and investment app Moneybox, which found that nearly one in 10 (9%) women plan to start investing this year, while 13% intend to increase their investments. Investing more was found to be the top financial goal among women aged 25 to 34 years old, according to the survey by OnePoll.
Over half (59%) of women who invested last year did so to increase their wealth, 47% aimed for a comfortable retirement, and 34% were planning for their family’s future. Almost one in five (18%) women who invested did so because they found it enjoyable and treated it like a hobby.
According to research by Moneybox, London and Northern Ireland had the highest rates of female first-time investors last year. Lower salaries and part-time work, along with caring responsibilities, can hinder some women – and men – from saving adequately for their later years.
Catherine Foot, director of Phoenix Insights, stated that while pay is a “major reason” for the gender pensions gap, the disparity is “made worse by life events that women can face – such as motherhood, divorce, caring responsibilities, and menopause – which disproportionately affect their ability to save”. She further added: “Addressing the gender pension gap means thinking about how women are supported at every stage of their working lives, and encouraging employers to go above and beyond the minimum levels of support.
“This should include integrating greater workplace flexibility around caring commitments or a significant life event and expanding the accessibility of workplace pension saving, as women are much more likely than men to fall under the minimum auto-enrolment earnings threshold.”
A recent study by Intuit Credit Karma has revealed the grim financial difficulties faced by parents, with a whopping 59% of them shouldering new debts to manage costs during maternity or shared parental leave, borrowing on average £2,658. Alarmingly, a quarter (25%) disclosed they were still paying off this debt when their little ones trotted off to their first day of school.
The examination delved into gender disparities too, discovering that women are less likely than men who take parental leave to hop over to jobs with better parental perks. In a stark contrast, 21% of dads taking shared parental leave had moved to companies with enhanced benefits versus just 9% of mums.
Engaging 2,000 Brits in a OnePoll survey, the research paints a worrying picture of the parental fiscal landscape. Intuit Credit Karma’s general manager (international), Akansha Nath, advises, “Setting aside savings where possible and carefully budgeting for your reduced income and unexpected expenses can help alleviate financial strain.”
