It's not top of everyone's list of "things I enjoy thinking about" but it is becoming increasingly critical. Planning for your retirement and what you are going to need financially in order to figure out at what age you'll be able to retire, how much income you will need to live a comfoftable life, what pension or other fund value you need to produce that income and hwther what you have will last a full retirement is just plain essential.
A report out this week from Scottish Widows shows that 42% of women are saving adequately for their retirement. Current economic pressures mean that women have been neglecting their long-term savings, with 19% saving less than the year before and 28% still not saving at all. Just 16% of women have made the effort to save more over the past year.
Women who are already saving into pensions are reluctant to cut their contributions and are well aware of the need to save for old age; 28% of those surveyed who plan to save more over the next 12 months are doing so for their retirement. Whilst 72% of women agree with the statement that people will have to take more responsibility for their own retirement, actions are not following words, with other savings being prioritised over pensions. The problem here is that women can be missing out on the significant tax benefits of saving into a pension and also they are at risk of plundering the savings accounts when a rainy day threatens - or a luxury starts looking like a necessity. On average where women are saving for retirement outside of a pension wrapper they contribute around £200 a month - and they are missing out on the benefits of pension tax relief in the process.
40% of women said they saved mainly for the short term and 28% mainly for the long term. Whilst there is very little difference between the sexes in levels of participation in employer-sponsored pesnions, men are TWICE as likely to be paying into an individual pension. When prioritising for their fanilies' finanical needs, women are putting mortgages and debt repayments at the top of the list - completely understandably. 25% of women said they have prioritised mortgage payments over the last 5 years and 31% have paid off debt. 42% have hd to prioritise living expenses over pension saving.
Divorce has a huge impact on both parties' finance but only 15% of women said pensions were discussed as part of their divorce settlement, even though t is a legal requirement that they should be. Women should ensure that this is part of any discussion, in order that they don't lose out. We can help advise on this tricky situation and help you navigate through the options.
As the report states, "Knowledge is power" - the underuse of pensions could be due to a lack of understanding about the benefits, or a knowledge gap around pension benefits or funding levels.
"Pensions are a hot bed of jargon and confusion, making them unattractive to the uninitaited, whereas ISAs are a starightforward and popular savings vehicle" the reports goes on. This is a fact - and many people have neither time nor inclination to trawl through complex and often impenetrable data to try to figure out what they should be doing. This is where a financial adviser is worth their salt - they can save you money in tax, increase your savings through sound investment and help flex programmes to suit your changing life. The question increasingly becomes not whether you can afford to take advice, but whether you can afford NOT to take it.
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