The report raises awareness around readiness for retirement and what helps women make informed retirement decisions. It outlines recommendations to encourage women to be better prepared for retirement.
The findings highlight that while women around the world have different expectations about their retirement, the underlying theme is that they are at risk of being underprepared and that access to workplace retirement plans and a flexible approach to retirement in the workplace is the way forward.
Some of the main differences identified across the globe were around the negative and positive associations women make with retirement, the age range in which women expect to enter retirement which varied globally by as much as 12 years and the variation in women’s replacement income expectations.
The report – Women: balancing family, career and financial security – is based on the findings among the female respondents of the third annual global Aegon Retirement Readiness Survey, a collaboration of Aegon and Transamerica Center for Retirement Studies, based on interviews with 16,000 people in 15 different countries in 2014.
Key findings:
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Women in the UK expect to retire from all paid employment at age 66, 4 years later than the global expectation of retirement at age 62.
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Women in the UK expect they will need an average of 63% of their working-age incomes after they retire, 8% less than the average global expectation of 71%.
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Women in the UK associate more positive words (69%), such as enjoyment, freedom, opportunity, leisure, than negative words (46%) like ill health, insecurity and poverty with retirement.
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Only 16% of women in the UK are confident they will achieve the retirement income they expect to need, with 45% of women in the UK saying they don’t know if they will.
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47% of working women in the UK are not confident they will be able to fully retire with a lifestyle they consider comfortable with only 12% stating they were very/extremely confident.
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Women are not taking the necessary steps to ensure sufficient income in later life – with only 12% of women in the UK already saving enough and 23% hardly saving at all.
Approaches among women in the UK to saving for retirement:
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43% always make sure to save
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18% only save occasionally
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19% not saving but intend to
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14% not saving, but have in the past
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6% never saved, don’t intend to
58% of women in the UK think their spouse/partner will be very important as a source of financial support during their retirement. While 10% of women in the UK don’t think their spouse/partner will be very important as a source of financial support during their retirement.
Attitudes toward flexible retirement among women – Only a minority of women in the UK (26%) expect to stop work immediately at retirement. A clear majority (50%) now expect to have some form of phased transition into retirement.
Angela Seymour-Jackson, Managing Director, Workplace Solutions, at Aegon UK, comments:
“Women have the same aspirations as men about their retirement. However, while the opportunities for women in society have never been greater, it’s fair to say that the responsibilities of family life often still fall primarily on women, which makes it difficult for them to adequately prepare for their retirement.
“In our survey we find that the goals that people have for retirement are broadly universal. Women and men share roughly the same aspirations. But this is not where it stops. The aspirations are broadly similar across countries, gender and age. For many, later life is largely viewed as time for travel, spending time with friends and family, pursuing new hobbies while continuing to work in the same field. I would question given the findings whether these goals are realistic, especially for women.
“On the one hand the position and the opportunities for women have never been better. Today’s women are better educated and enjoy career opportunities that our grandmothers’ generation could only dream about. The women in our survey have now largely closed the gap with men in terms of educational achievement. This means that women and men are equally prepared for a professional career. However, for women the path to a financially secure retirement remains littered with obstacles.
“Social and workplace differences begin to emerge with child and elder care responsibilities. The harsh reality is that the responsibilities of family life still fall primarily on women. It’s especially the women who need to balance work and family commitments. As a consequence, women work more part-time and earn significantly less and this has a negative impact on the ability of women to prepare for their retirement.”
“One of the key findings in the report was the fact that women don’t expect to stop work immediately at retirement. The majority of women now expect to have some form of work after retirement and the pressure will be on employers to embrace a flexible approach to support this. Reasons mentioned for continuing to work after retirement included enjoying work, remaining active and the money.”
Recommendations from Angela Seymour-Jackson:
“Balancing work and caregiving responsibilities leads women more often into taking career breaks and working part-time, which not only means a lower income, but often also more limited access to company retirement plans and lower overall retirement plan contributions. Our recommendations, we believe, can help women achieve a better and more comfortable retirement.”
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Take advantage of the opportunities to save for retirement offered in the workplace. Auto-enrolment has provided the UK with a great start for women in the workplace to start their savings journey, even if they only work part time. Workplace pensions are often undervalued and it’s key for employers to highlight how valuable they are to employees meeting their retirement goals.
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Employers need to be flexible and offer age-friendly workplace policies to support workers taking a phased approach to retirement especially in light of the pension reforms being introduced in April. It will become more common practice for working employees to be both earning and income and taking a retirement income at the same time.
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Seek advice – the importance and value of good financial advice is the difference between someone achieving their retirement goals or having to continue to work well into old age to support their standard of living.
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Aegon helps bring retirement income planning to life with an income planning tool that helps people see how far their money will go in retirement
With customers facing big and complex decisions about what to do with their savings, Aegon has overhauled and digitised its “wake-up” journey to bring to life the options on its new Your Retirement Planner website – www.aegon.co.uk/retirementplanner
The centrepiece of the service is an interactive income planning tool, which responds to the information people provide on their savings and visualises what it could convert to in drawdown, a guaranteed product, annuity or cash lump sums depending on the mix of options they choose.
The site also explains the potential implications of different options. For example the tool highlights that taking a large percentage of savings in drawdown each year could mean you outlive your savings, that taking a large cash lump sum may have big tax implications and that the reforms may encourage new forms of pension fraud.
Meet the short-sighted mole bringing retirement choices to life
To further bring to life new retirement options and challenges, Aegon has created a series of animations involving a short-sighted mole, who initially fails to understand why blowing his pension all at once may not be such a good idea. Aegon believes that it is only by making retirement income challenges understandable that customers can be expected to make good decisions:
- Film 1 – Mole gets a retirement reality check - Click here
- Film 2 – Mole understands his income options - Click here
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