Women fear lower standard of living in retirement

Women fear lower standard of living in retirement
Photo: Teona Swift via Pexels

Women are more likely to fear their standard of living in retirement will fall, compared with men, a study has indicated. 

According to Canada Life, while there is little difference between men and women in terms of what they think is an ideal retirement income, women are far more nervous about what their 'golden years' might actually entail.

In an opinion-based poll carried out by Opinium, among 506 UK adults aged 55 plus with a defined contribution pension, women expressed very little positivity about prospects for retirement. 

Only 6 per cent of women thought their standard of living might actually improve, compared with 12 per cent of men. Some 38 per cent of women thought living standards would get worse than it is today.

While the research showed little difference between the sexes by way of ideal incomes in retirement, it also suggested pension pot sizes do have a clear effect on the expectations of what those pensions will deliver by way of income.

For those whose pension values are under £200,000, £20,000 was the average ideal retirement income, while for those whose pension is over £200,000, the figure is £28,300. 

According to the Pension and Lifetime Savings Association's guideline retirement living standards, the ideal income equates to a moderate living standard.

Nick Flynn, retirement income director at Canada Life, said: "A generation of savers planning their retirements have relatively moderate ambitions for their ideal incomes.

"Far from splashing the cash, the over 55s are seeking an income of around £22,500, which combines both private savings and the state pension of around £9,339 currently.

"This requires the pension and any other savings to generate an income of around £13,161 a year."

Other findings included:

  • Over 55s with defined contribution pensions who plan to buy an annuity say £22,500 is the ideal retirement income.
  • Little difference between genders, with men looking for £22,900 while women say £21,500 is ideal.
  • Differing expectations of the ideal retirement income driven by size of pension pot – pots valued under £200,000 looking for an income of £20,000, while pots valued over that would like an income of £28,300.

At current standard annuity rates, a pension of £200,000 could deliver around £10,000 a year guaranteed for life, likely to be more for those who qualify for enhanced rates and a better income because of their health or lifestyle.

The PLSA's three retirement living standard levels are minimum, moderate and comfortable, and the standards have been designed to fill the perceived gaps in current approaches and aid advisers when helping their clients with retirement planning.

Earlier this month, the PLSA announced that pension adequacy was the organisation's main strategic project in 2022.

At the time, a spokesperson for the PLSA said: "We will be doing further policy and research work on this, with our member pension schemes, over the course of the year.”