Retirement gender gap continues to shrink

The gender pay gap in retirement is shrinking, but women retiring in 2018 will still have incomes nearly £5,000 lower than men, according to new research from Prudential.

In its latest ‘Class of´ research, the company found that that men expect to retire on an average annual income of £21,800 compared with women´s expected retirement income of £16,900.

While this means that women will be 29% worse off than men on average, the good news is that the gap is closing. In 2008, the average expected retirement income for men was 84%, or £9,500, higher than that expected by women.

What´s more, both men and women will retire on a higher average annual income in 2018 than any other time. Women retiring this year will be £2,600 a year better off than last year, while men will be £1,150 better off.

“As working patterns continue to change and become more flexible and shared parental leave is more widely encouraged by the government agenda and employers, the future looks positive for narrowing the retirement gender gap,” said Kirsty Anderson, a retirement income expert at Prudential.

“It can be difficult to justify any extra expense when taking a career break, but it is extremely important for anyone taking time out of work to maintain their pension contributions. Saving as much as possible as early as possible is the best way to secure a good quality of life in retirement.”

The research also revealed that, despite retiring with a record high income, women in the Class of 2018 are feeling less confident about their finances than in previous years, with 47% saying that they are financially well-prepared for retirement, compared to 50% in 2017. Meanwhile, nearly six in ten (59%) men say they feel financially prepared for retirement.