Rishi Sunak grilled by Neil on state pension increases
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The findings came amid research showing women retiring in 2021 expect average retirement incomes which are 25 percent or £4,600 per year lower than male counterparts. This new research, from the independent equity release adviser Key, found men expect their annual income to be £23,646.
In comparison, women expect theirs to be £4,655 lower at £18,991.
According to the ‘Retirement Ready 2021’ study into the finances and ambitions of more than 1,000 people expecting to finish full-time work in 2021, the gender gap is even more stark if taken over a 20-year retirement period.
Over this time, men can expect to receive £93,000 more than women.
However, Key said 2021’s crop of retirees have seen the gender gap close slightly from 2020 when men expected 29 percent more income compared to women, at £22,876 versus £17,762.
Nearly a third of women (29 percent) expect to retire on less than the Joseph Rowntree Foundation’s (JRF) Minimum Income Standard of £12,500 – a proportion that has risen since 2020 (27 percent).
The research found men’s retirement income was more stable, with less than one in five (17 percent) expecting to be below this minimum standard in both 2020 and 2021.
Worryingly, a large proportion of women retiring this year said they don’t know what their retirement income will be, with a fifth (20 percent) unsure about their finances, more than double the proportion of men (nine percent).
So, what do the sources of a person’s retirement income look like?
Income from company pension schemes make up the greatest proportion of men’s income in retirement (34 percent), the survey found.
This is followed by the state pension, at 30 percent.
On the other hand, women expect to receive the greatest proportion of their retirement income from the state pension (34 percent), followed by company pension schemes (29 percent).
Personal pension came in third place for both men and women in terms of highest proportion of retirement income, standing at 15 percent for men and 11 percent for women in 2021.
Across both genders, 2021 has seen a decrease in reliance on company pension schemes with more looking to the state pension for income.
Other savings and investments make up 12 percent of retirement income for men, and 13 percent for women, the research found.
Women (15 percent) remain more likely to look at accessing their housing equity than their male counterparts (10 percent).
Will Hale, CEO at Key said: “With women typically earning less over the course of their careers, more likely to work part-time or need to juggle their career and caring responsibilities, the gender pay gap quickly becomes the gender pension’s gap at retirement.
“It is disheartening that in 2021, women still expect 25 percent less than their male counterparts and nearly a third expect their income to fall below Joseph Rowntree Foundation’s (JRF) Minimum Income Standard.
“There is no quick fix to this situation but it does illustrate how important it is to consider all your assets at retirement.”
Mr Hale added: “Planning your finances for retirement is important for everyone – but especially those who are either facing into the impact of the gender pension’s gap or a find themselves retired and struggling on less than the minimum income standard should speak to a specialist adviser.
“Making the most of your income in retirement is about knowing your options and getting good advice will ensure you consider how assets such as the equity you have in your home might allow you to live a more comfortable and fulfilling retirement.”
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