Did you know that women typically live longer than men? The difference in life expectancy is almost 4 years in the UK.
In addition, women are much more likely to live alone when they are older. Statistics show that only 18% of women age 85 or older are still married. For comparison, 58% of men over age 85 still have a partner who is living.
As a result of this, women tend to spend considerably more on care in old age. According to one source I came across, they need to spend three times more.
There are some other interesting facts when it comes to women and personal finance (IN GENERAL):
- Tend to accumulate lower entitlements to state pension. [State pensions payments stop when the individual in question dies, so relying on someone else’s state pension when they have a shorter life expectancy is dangerous.]
- Often have much less saved in personal or employer pension schemes. This is particularly the case when a career has been put on hold to embark on the magical expat mystery tour.
- Employer defined benefit pension scheme payments typically reduce by 33-50% to surviving spouses on death of the member.
- Much less involved when it comes to financial planning, e.g. for retirement.
- Often less aware of how the family money is invested and how accounts are managed.
As you can imagine, a longer life expectancy combined with lower pension assets and/or little or no prior involvement in managing the family finances is inherently risky.
Here are some simple action points that can be taken to reduce the risk of women running out of money in later life.
- Even if a spouse is not working, they can (and should) make voluntary National Insurance Contributions to build up state pension entitlement. Read more here.
- Both parties should be involved with the financial planning process and management of family finances.
- If you have defined benefit pension and haven’t done so already, find out how much it will pay to a surviving spouse.
- Build a family “in case of death folder”.
You should not construe the views expressed in this article as personal advice.
You should always contact a qualified financial adviser to obtain up-to-date advice on your own personal circumstances.
The author does not accept any liability for people acting without personalised advice. Nor does he accept liability for those who base a decision on views expressed in this generic article.
This article is based on legislation as at the time of writing. While we regularly update articles, pension and taxation legislation changes on a regular, often sudden, basis.
Therefore, please check for later articles or changes in legislation on official government websites. You should not rely upon this article in isolation.