With the pay gap reaching 8.3% in April 2022, women in the UK still don’t take home an income comparable to their male counterparts. But what’s the impact of the gender pay gap on women’s savings?
To investigate this, money.co.uk savings statistics analysed government data for ISA (individual savings account) and private pension wealth to determine how much more women needed to save to close the gender savings gap.
Money.co.uk savings statistics can reveal that women save a third less (34.5%) than their male colleagues, when considering both ISA value and pension savings. This amounts to a significant difference of over £40,000 in savings. In particular, by the time they are 65, women will have had to put aside an extra £125,067 to close the gender savings gap, a difference of 40%.
The disparity between men and women increases with age, with the smallest difference between men and women at age 25 to 34, at a difference of 20% (£3,483) in savings. In comparison, women at the start of their savings journey still average a quarter less (25.8%) than men when aged 16-24.
Money.co.uk’s cost of living statistics reveals that the disparity might increase with the crisis. Almost 1 in 5 (18%) of female workers did not see a salary increase in the past year, while this happened to only 13% of their male colleagues. When it comes to mental health, nearly half (48%) of women are expecting stress as a result of the cost of living crisis, compared to 36% of men. Almost 1 in 5 men (18%) do not have financial concerns, but only 8% of women can say the same.
Men and women have an average ISA savings difference of 9%, totalling £1,716. Interestingly, the ISA gap reaches its peak when women are between the ages of 45 and 54. By this age, men have saved £19,194 while women have saved £16,199, representing a gap of almost 16%. That is a five percentage point increase from the age bracket of 35-44 (11.8%) where the savings disparity is £1,230.
The pension value for men across the UK averages £106,450, whereas for women it is valued at £64,600. That is a difference of 39% in retirement funds that women are not able to save as part of their pension.
When most begin withdrawing from their pensions at 65, the gap reaches 47%, the lowest value recorded. To close the gap at retirement age, women would require an additional £123,100 in savings to benefit from the same retirement fund as their male colleagues.
Lucinda O’Brien, personal finance expert at money.co.uk savings statistics, provides guidance on best ways to save for retirement.
O’Brien said, “There are many ways of managing money in addition to the use of an ISA account and pension schemes. Making the most out of your savings can be crucial to secure your retirement funds for later life.
“Choose the right savings account – Not only should you choose the right savings account to suit your current income, but you should also reassess which savings account you need depending on your upcoming financial goals. For women in their twenties, an instant access account that has low commitments and immediate access to your money could be more suitable. For those slightly older, moving your funds to a fixed rate account that provides higher interest rates as a better savings option for long term goals.
“Consider alternative forms of investment – If you are looking to save for a long-term goal such as retirement, consider investing your money in the stock market. Although that comes with a degree of risk, it can offer higher returns than a savings account. Remember to always do your research before investing your savings.
“Use apps to help you save – Though saving pennies may seem fruitless, never underestimate the power of consistently saving even just a few pounds here and there. Automatic saving apps or banking functions such as Plum or Chip can help bolster your savings without even noticing.”