Women get £6,400 less than men in retirement

Women retiring in 2017 will be £6,400 worse off a year than men in retirement, a new report has warned. The research also shows that the financial gap between the sexes has grown by £1,000 in the last year, a sign of penalties faced by women who have taken career breaks or changed their working patterns to look after children.

The gender gap

Female retirees expect to have £14,300 a year to live on from personal, company and state pensions. This is the second highest on record although slightly down on the £14,500 for those retiring in 2016.

But the insurer found that men expect £20,700 a year - £900 more than last year which is helping drive the gender gap to its highest level for three years.

However, this year’s female retirees are feeling slightly more confident about their finances, with 50 per cent saying they are financially well-prepared for retirement, compared with 48 per cent in 2016.

Kirsty Anderson, a retirement income expert at Prudential, said: “It’s encouraging that many women planning to retire this year feel financially well-prepared for their years in retirement. In fact, women’s expected retirement incomes this year are the second highest on record.

“However, the gender gap in retirement incomes continues to grow, reflecting the fact that many women will enter retirement having taken career breaks and changed their working patterns to look after dependants. Unfortunately, as a result, many women will end up with smaller personal pension pots and some are also likely to receive a reduced State Pension.

How to maximise your pension

For anyone who takes a career break, maintaining pension contributions and, where possible, making voluntary National Insurance contributions after returning to work, should help to minimise the impact on their retirement income. The best way to secure a good quality of life in retirement is to save as much as possible from as early as possible in your working life. Consulting a professional financial adviser to ensure that retirement financial plans are on track is a sensible route for many.

“However, with a greater number of women staying in the workforce for longer these days, and employersincreasingly offering more flexible working patterns, the outlook looks more positive for women’s retirement incomes in the future,” adds Kirsty.