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Confidence conundrum for women approaching retirement

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What worries women approaching retirement?

New research has found that, for many women approaching retirement age, there is a ‘confidence conundrum’.

These women are anxious about affording a comfortable retirement, but are least likely to consider ways to cover any funding gap. The new report from the Equity Release Council and Key – The Pension / Property Paradox: revisiting the retirement confidence gap – looks at trends in older homeowners’ financial plans, as well as their confidence levels during the past year.

According to the research, the proportion of older homeowners who worry about running out of money in retirement has risen to more than a third in the past year. Over 55s worrying about money in retirement have risen to 34%, up from 27% a year earlier.

Men represent those with the fastest growing worries about retirement affordability, with the proportion of men worrying rising by 9% to reach 32% in the last year. However, women who are still working by approaching retirement are the most anxious, with 48% saying they are worried about the future.

Within the research is the finding that women feel they have less choice about when they can retire. 41% of women who are still working say they are confident they can still afford to choose when they retire, compared to 56% of working men. One factor driving these low retirement confidence levels for working women is the wide gender pension savings gap. According to official figures, the value of women’s pension savings can be as much as 40% less than for men, which leads to challenges to maintain living standards in retirement.

Set against the backdrop of an economic decline in the UK, and confidence around having a comfortable retirement is understandably dented. Nearly a third of over 55 women who are still working expect to enjoy a less comfortable retirement than their parents. Only 21% of working men over the age of 55 expressed this same concern.

Concerns about health were also highlighted in the study, with 48% of older homeowners worrying about falling ill and having to pay for care. This proportion is up from 39% a year earlier, suggesting that the Covid-19 pandemic is weighing heavily on our minds. 24% of respondents said they were worried about having to sell their home, up from 18% last year, with women most concerned.

The Covid-19 pandemic has had a significant impact on the jobs market for older workers, with more than 90,000 over 50s made redundant between June and September. Job losses will have a negative impact on the ability to save for retirement during these crucial years for saving.

The research found that 12% of women over 55 have stopped saving altogether as a result of the pandemic, along with 8% of men.

David Burrowes, Chairman of the Equity Release Council, said:

“This research reveals that women are experiencing an acute crisis in confidence about achieving a comfortable retirement.

“Women are faced with a disproportionately bigger challenge in building a nest egg for later life. This is driven by the perfect storm of longer life expectancies and gender differences in earnings, savings and working patterns.

“Yet despite this, women are also less likely than men to consider later life lending products when facing a retirement funding shortfall. A more holistic approach to financial planning is needed now more than ever, as an over-reliance on pensions alone will make it harder to maintain living standards in later life.
“Looking ahead, there are important steps we can take to help strengthen people’s confidence ahead of retirement. Encouraging them to consider a range of funding options could improve their prospects of achieving greater financial security.

“The scale of untapped potential in the UK’s property wealth is substantial and has an important role to play – but it is vital that consumers are supported to make decisions that will suit their needs in both the short- and long-term.”

Equity Release Council

The information contained in this blog post does not constitute advice or recommendations. You should seek independent financial advice before acting on any information on this website.

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