Half of women approaching retirement are worried about running out of money, report finds

The amount of women over the age of 55 who are worried about running out of money in retirement has increased to over a third (34%) in the last year, according to a new report by the Equity Release Council.

Half of women approaching retirement are worried about running out of money, report finds

The report looks at trends in older homeowners’ retirement financial plans and confidence levels over the last year.

It reveals the proportion of homeowners aged 55+ worried about running out of money in retirement has increased to over a third (34%), up from 27% a year earlier. Notably, these concerns are rising fastest among men, up nine percentage points over the last year to 32%. However, women who are still working remain the most anxious (48%) – the highest proportion of any group in the study.

The research also highlights that women feel they have less power over choosing when they can retire. Less than half (41%) women still working are confident they will be able to afford to choose when they retire, compared to a majority (56%) of men still working.

Low retirement confidence levels can be partly attributed to the wide gender pension savings gap. Data from the Office for National Statistics (ONS)  shows the value of women’s pension savings can be up to 40% less than men, highlighting the struggle to maintain living standards in retirement.

This comes as the UK’s economic decline triggered by the coronavirus pandemic has dented many people’s hopes of achieving a comfortable retirement. Almost a third of women still working over the age of 55 (29%) expect to have a less comfortable retirement than their parents. This compares to 21% of men aged 55+ who are yet to retire.

As concerns about health are weighing heavily in the current climate, the research found that 48% of older homeowners are worried about falling ill and having to pay for care, up from 39% a year earlier. Nearly one in four (24%) are worried about having to sell their home, up from 18% last year. Women are most affected by this concern (26% vs. 21% of men).

The disruption to the UK labour market caused by coronavirus has acutely impacted older workers, as a record 90,000 people aged 50+ were made redundant between June and September 20204. Steep income falls will hit older workers’ retirement savings as they focus on paying for daily living costs.

The research shows this is already starting to happen, as more than one in 10 (12%) women over the age of 55 have stopped saving altogether as a result of the pandemic, as have 8% of men.

However, the findings also show that, despite greater concerns about the ability to fund retirement and lower pension savings, women who own their own home are less likely than men to consider using later life lending products – such as lifetime or retirement mortgages – as an alternative source of money to support their income in retirement (23% vs 31%).

David Burrowes, chairman of the Equity Release Council, said: “This research reveals that older women in work 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.”

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