week #24 publish

For my challenge this week I have put together an article aimed at women to get them thinking more about their pensions or retirement financial plan. Back at the beginning of the year I spoke to a women’s group in my workplace about some of the factors that affect women’s earnings through their working lives, from education and early career choices, caring responsibilities, opportunities and promotions through to retirement. Since then I’ve been reading and thinking more about pensions and their importance for women. I’ve been able to publish this article here on my own site and also on our workplace intranet.

Can you focus on savings when the working world suddenly seems a more uncertain place? I’d respond that knowledge is power and it’s never too late to educate yourself about money and how to make it work for you.  If you aren’t ready or able to implement a plan now, then you can at least consider what your actions could be for the future.

I spoke with the group in January about the fact that women’s lifetime earnings are negatively affected by their being more likely (than men) to work part time and/or bear the cost of childcare and career breaks.  On average women’s pension pots are worth 40% less than men at retirement and BAME women tend to have even lower value pension funds at 51% less than is typical for a white male.  So that longer life expectancy we enjoy compared to men might be less well financed that we are imagining.

Lockdown may have made you more concerned about your ability to make savings and also affected how you feel about having that security for the future.  If you have made more savings during lockdown as normal where costs of socialising, commuting, regular haircuts and other activities have dropped away then perhaps you have considered allocating those unexpected funds for longer term savings or your pension.

So how are you doing with your retirement savings right now?  Do you know what you have?  Do you make regular payments into a retirement fund, whether that’s a pension or other types of savings?  What is your forecast for income in retirement if you carry on the path that you are on now?  Do you know what your (UK) state pension might be and when you will get it?

Pension figures do make for scary reading.  To enjoy a pension income of £25,000 a year its estimated that you’ll need a savings pot of £425,000 which feels like a very large sum indeed.  I think that many people faced with this kind of stark reality just turn away.  At every stage of live we have something to pay for: student loans, rent, mortgages and bills, children and other dependents to support, we send money home to family, we run a car and given that we work hard we may like to have a holiday now and then.

If you aren’t already making savings, then how would you feel about 10%, 20% or more of your salary being set aside – it feels like a lot right?  Broadly speaking the advice is to try to put away half of your age as a % of your earnings, so if you are 40 then that would be 20%.

To begin at the beginning it’s a good idea to check your state pension which you can easily do yourself https://www.gov.uk/check-state-pension

I just did that for myself and it took me 1 minute and 20 seconds.  It’s really worth a look.  The current UK weekly state pension is £175.20 a week.  If you have gaps in your national insurance contributions, perhaps because of a career break, then you might be able to top them up to ensure you get the full amount on offer so that’s worth checking out too.  Again, this is really easy to look up at https://www.gov.uk/check-national-insurance-record.

If you have the option of a workplace pension you need to be in it to get the benefit of it.   Don’t ignore the opportunity to take employer contributions and tax breaks on your savings which will help to top up the total.  Pension plans aren’t the only way to make long term savings but these extra benefits can be significant and a pension plan also means that the money is protected until you are at least 55 years.

If you are saving into a pension scheme then so far so good, but when did you last check in on how you are getting on and ensuring that the amount of savings you are putting away are the best that they can be for your age and stage of life.

Of course, the other avenue to consider is that this conventional idea of retirement just might not be for you.  If you have marketable skills or are prepared to acquire new skills over time then there is no reason for you not to continue to work and earn money for as long as you are healthy enough to do so.  Retirement from conventional employment is used by many to make money out of other skills or hobbies which can supplement or even delay the need to draw down on pension savings.

You may, whether consciously or sub-consciously, be thinking that an inheritance will see you through old age.  Unless this is already set up (and in writing) then it wouldn’t be wise to count on it.  My parents are only just over 20 years older than me so if they lived until their early 90’s say then I’ll be 70 before any inheritance might appear.  By this time their savings may have been spent on their own elder care or they may decide that the local dog’s home is a more worthy cause and I get nothing.  So it’s not a very reliable plan.  I also prefer to assume that the same uncertainty could apply to your partner’s pension.  I believe that women should do their best to make independent provision for a financially secure retirement.

Take charge and educate yourself about this important topic. There is loads of free advice and ideas out there. Go and explore.

More reading:

https://www.pensionsadvisoryservice.org.uk videos, advice, midlife reviews and how to avoid pension related scams.

www.pensionwise.gov.uk has access to free advice if you are 50+

Read about Clare Seal’s journey out of debt on @myfrugalyear

https://thewowfoundation.com The Women of the World Foundation are holding an online festival June 27-28 to look at inequalities affecting women including economic and financial aspects.

http://www.100yearlife.com Lynda Gratton wrote this book which is about longevity and work, you can find her discussing it on you tube too if an audio visual summary is more your thing https://www.youtube.com/watch?v=yDJ735rwFAI

Lastly for something really different here’s an introduction to the FIRE movement https://www.sharesmagazine.co.uk/article/how-to-turn-your-dream-of-early-retirement-into-reality

Writing and publishing an article is a slightly intimidating challenge. There are lots of finance specialists out there, but I work in HR and so my perspective is more to do with what I see people doing in real life and having some empathy about why women might not be the ones saving the most into their company pension.

Having taken up the challenge though I’ve enjoyed it and I’m looking forward to getting feedback from my readers about this issue. Do it again, yes I think so! Clean, green and ironically one of the the most thrifty@50 challenges yet…or is it 😉

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