Minimising the impact on your retirement income
The gap between women’s and men’s annual average expected retirement incomes in 2017 has grown by £1,000 in the last year, according to new research.
Future financial plans
The unique annual research has, over the last ten years, tracked the future financial plans and aspirations of people planning to retire in the year ahead. This year’s Class of 2017 research shows that women expecting to retire this year will be £6,400 a year worse off on average than their male counterparts, and nearly £200 a year worse off than women who retired in 2016.
Annual retirement income
Women this year expect an average annual retirement income of £14,300, which is the second highest on record, although slightly down on the £14,500 for those retiring in 2016. However, this year’s female retirees are feeling slightly more confident about their finances, with 50% saying they are financially well-prepared for retirement, compared with 48% in 2016.
Women’s incomes stagnate
Meanwhile, as women’s incomes stagnate, men’s expected retirement incomes have shown a fifth consecutive year of growth. Men retiring this year expect an annual retirement income of £20,700 – £900 a year more than last year, which is helping drive the gender gap to its highest level for three years.
Tracked retirement income
The study, which has tracked the retirement income gender gap for ten years, shows that men retiring this year will be 45% better off than women. The gender gap was at its widest in 2008 when the average expected retirement income for men was 84% higher than that expected by women.
Financially well prepared
It is 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.
Personal pension pots
However, the gender gap in retirement incomes continues to grow, probably 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.
Minimise the impact
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. τ
 Research Plus conducted an independent online survey for Prudential between 8 and 22 November 2016, among 10,605 non-retired UK adults aged 45+, including 1,000 planning to retire in 2017.