Women could risk emptying their pension pots 14 years too soon – and a decade earlier in their lifetime than men – according to modelling by a financial services provider.
The research, released ahead of International Women’s Day (Saturday March 8) indicated that, based on current pension withdrawal rates, women could empty their private pension savings by the age of 73.
Legal & General (L&G), which published the research, said that, with the average life expectancy of a 60-year-old woman in the UK sitting at 87, some female retirees could be left with a 14-year shortfall between their private pension funds running out and the end of their lives.
By comparison, men could see their pots run dry by the age of 83, the research indicated.
With the average life expectancy of a 60-year-old man in the UK at 85, men could have two years of retirement without any leftover private pension savings.
Katharine Photiou, managing director of workplace savings at L&G, said that, after decades of saving, the ability to withdraw money from a pension can create a “lottery effect”.
But she cautioned: “What seems like financial freedom now might turn into uncertainty later.”
The modelling used Office for National Statistics (ONS) life expectancy calculations as well as an Opinium survey among 3,000 people aged over 50 carried out in December 2024.
The calculations made various assumptions about inflation and investment returns and that people would start making regular withdrawals when they turned 67 until their private pension pot ran out. It was also assumed that people had no other sources of income, such as property wealth or a guaranteed pension income based on someone’s salary.
People will also be entitled to the state pension, the size of which depends on factors such as national insurance (NI) contributions.
The research indicated that women are typically withdrawing less from their pension than men but have less money saved into it to start with, at £40,000 versus £87,500 for men.
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Of those receiving income from an income drawdown pension, women are receiving £625 per month on average, compared with £875 for men.
However, women were more likely than men to have increased their withdrawal rate since they first started making withdrawals.
More than a quarter (27%) of women making withdrawals had increased their withdrawal rate, compared with less than a fifth (19%) of men.
The research was released as a survey of 2,000 people for savings and investment app Moneybox, which found that nearly one in 10 (9%) women plan to start investing this year, while 13% intend to increase their investments.
Investing more was found to be the top financial goal among women aged 25 to 34 years old, the survey by OnePoll found.
More than half (59%) of women who invested last year did so to grow wealth, 47% wanted to secure a comfortable retirement, and 34% were aiming to provide for family in future. Nearly a fifth (18%) of women who invested did so because they enjoyed it and treated it like a hobby.
London and Northern Ireland had the highest rates of female first-time investors last year, the Moneybox research indicated.
Lower, part-time salaries and caring responsibilities can be obstacles to some women – and some men – being able to save adequately for later life.
Another study from money platform Intuit Credit Karma found that over half (59%) of parents have taken on new debt to afford maternity or shared parental leave, borrowing an average of £2,658.
A quarter (25%) of these parents said they were still in debt when their child had started school.
Women were less likely than men taking parental leave to say they had moved to a job with enhanced parental benefits.
A fifth (21%) of men taking shared parental leave had switched jobs to an employer offering enhanced benefits, compared with 9% of women taking maternity leave, the OnePoll survey of 2,000 people across the UK found.
Akansha Nath, general manager (international) at Intuit Credit Karma, said: “Setting aside savings where possible and carefully budgeting for your reduced income and unexpected expenses can help alleviate financial strain.”
