Last year, the International Longevity Centre UK (ILC) – in partnership with Royal London – looked to quantify the value of financial advice. The report found that over ten years, regular meetings with an adviser could increase overall wealth by more than £47,000.

Scottish Widows’ “Women and Retirement” report, meanwhile, has found that structural inequalities mean women are falling behind men in retirement planning. This “lagging behind” could result in a £100,000 difference in the pension pot at retirement for a woman, compared to a male counterpart.

Financial planning is a juggling act. Managing pensions, investments, and an estate can be tricky but your clients should seek expert financial advice regardless of gender.

Not only could they be £47,000 better off, but the ILC confirms regular advice can have a positive effect on emotional wellbeing too.

Reports suggest women could be £100,000 worse off in retirement

Scottish Widows recently released their “Women and Retirement” report. Looking at the impact of the gender pay gap on pension savings, it found that a woman on the median wage over a 44-year career, and an average pension savings rate, would leave work with a retirement fund £100,000 less than a male co-worker.

This is a stark difference, highlighting how structural inequalities in pay can affect financial security in later life.

The gender gap in “adequate pension savings” – here defined as 12% of income or membership in a defined benefit scheme – is just 1%, the lowest on record. However, while 59% of women over 30 are saving adequately, lower average wages mean that their pension contributions are £1,300 less each year.

Women make up a larger proportion of part-time workers (75%), receive lower wages in full-time work (£6,100 less in median annual wage) and earn on average £10,800 less a year.

All this means that despite adequate savings – as measured by percentage of pay – women could still see themselves £100,000 worse off at the end of their careers.

A Department of Work and Pensions (DWP) error has led to underpayments for women

A DWP error has led to underpayments in the State Pension for tens of thousands of married, divorced, and widowed women. The total loss is expected to be in the region of £3 billion and is due to be repaid over the next six years.

Those who could be affected include:

  • Married women whose husbands reached age 65 before 17 March 2008.
  • Widows whose pension did not increase on their husband’s death or who believe they might have been underpaid during their husband’s lifetime.
  • Over-80s receiving a basic pension of less than £80.45.
  • Widowers and heirs of married women where the woman has now died but was underpaid during her life.
  • Women who divorced post-retirement.

Managing retirement income effectively is difficult, even with known amounts. Underpayments or fluctuating income can make the task much harder and could lead to your clients running out of money in retirement or leaving their loved ones liable to a large Inheritance Tax (IHT) bill.

A recent Which? report confirms that around 30% of those yet to retire overestimate the size of the State Pension they will receive, some by as much as £50,000 over the whole of retirement.

Boolers can help your clients plan for their dream retirement

Scottish Widows found that 72% of women have experienced financial hardship. This inevitably leads to a focus on the short-term but paying our future selves first is still as important as ever.

Boolers can help your clients take a holistic view of their finances, filling any State Pension knowledge gaps, helping to reclaim underpayments, and putting a long-term retirement plan in place to achieve their long-term goals.

Pensions are incredibly tax-efficient. Your clients will receive basic-rate tax relief on their contributions up to the Annual Allowance and can reclaim extra relief through their tax return if they are higher- or additional-rate taxpayers.

Starting to pay into a pension as early as possible is the best way to build a large fund. It allows for a greater number of contributions and means compound growth can get to work over a longer period.

While auto-enrolment has been a huge success in terms of encouraging people to save, the minimum amounts might not be enough. We can work with your clients, using cashflow modelling to look at current contributions. Where a shortfall exists, we can help decide on the best ways to plug the gaps.

We will then put a plan in place and review that plan regularly to ensure it is still on track, helping your clients to achieve their dream retirement.

Get in touch

Scottish Widows found that 58% of women are worried about running out of money in retirement and 55% don’t feel adequately prepared.

While the gender pay gap exists, saving adequately for retirement as a woman will be harder, but engagement and regular advice can help.

Not only could it make your clients more financially secure, but regular advice can also help to increase confidence and make people feel more in control of their financial future, improving emotional wellbeing.

If you have clients who would benefit from help planning their retirement, please get in touch. Email or call 0116 240 7070.