Making Cents: Why aren't women as good as men at pension planning?
Pension planners often suggest aiming to have between half and two-thirds of your final salary in retirement.
Women need to get better at looking after their long-term financial independence, an online conference heard last week.
Susan Elliott, who has more than 20 years experience in Irish financial services and works as an independent consultant, made the comments as part of a webcast on Women and Pensions as part of Pensions Awareness Week (PAW) .PAW is designed to raise awareness about retirement planning and to help people take charge of their long-term savings.
Research from Irish Life last year found that women’s pensions were around 22% lower than men’s pensions.
“Women are good at thinking of how to fund a certain lifestyle now; we are prioritising being able to finance looking after our mental and physical health,” Ms Elliott said. “That is all good but there is a longer game to play.
“We need to look at the future we want to have and plan accordingly. Most people when they retire are doing so in good health and they need to be able to fund that whole new chapter of their lives.
“Women need to take control of their pensions as individuals. Men are much better at doing this.”
Pension planning can appear horribly complex to many, trying to understand how much their current pension (if they have one) is worth and unsure of how much they will actually need in retirement.
Hopefully, most people will have reduced costs by the time they retire, with children educated and hopefully mortgage and any other big debts repaid. But other costs come into play, for instance you can expect to be spending more on healthcare and possibly other care-related costs.
Pension planners often suggest aiming to have between half and two-thirds of your final salary in retirement. The Contributory state pension is currently up to €248.30 per week, less than €13,000 per annum. Comparing this with your current income gives you an idea of how much of a shortfall you need to make up.
Moneycube.ie’s Head of Client Services Olive Ryan also spoke at the event and pointed out extra challenges women face when it comes to building a pension pot.
“Women live longer, earn less, and often retire earlier than men,” she said. “That creates a need for clever planning of their pension wealth. While the gender gap is well known, the lifetime effect is becoming clearer.” Ms Elliott also highlighted that women need to plan for various disruptions in their earnings that can occur during their careers.
These could be for a number of reasons including: maternity leave; changing careers; going back to college; or having to care for a family member. She said these gaps often mean that women are underfunded when it comes to retirement.
“Even people who are in company pension funds need to look at how they might be able to top up their pensions and make themselves more secure in the future – don’t just rely on the pension plan that has been put in place; look at how you can maximise it,” she said.
If you are interested in pension planning but don’t know where to start, you will find a wealth of information at www.pensionsauthority.ie, including a calculator to help estimate the contributions you should be paying to provide your desired pension, based on your current age and salary level.
From there, it is worth sitting down with a financial adviser to work out a plan. Bring all the information you have on any pensions you are currently paying into. The Government encourages pension planning by offering tax relief on contributions so a financial adviser will be able to help you make the most of that relief.
And, while this is a job worth doing at any age, you will reap the most benefits if you start this planning early.
“Don’t think about it in your 40s or 50s when it might be too late,” Ms Elliott said. “You need to be thinking about it in your 20s and 30s as this will give you longer time to build up a fund.”
Halloween is still several weeks away but, given the lack of chances to celebrate in recent months, I think many families will be keen to embrace the spooky season early this year.
If you have children looking for costumes, Aldi have you covered with a Specialbuy range, in store from Thursday.
The range of costumes are €4.99 each and there are numerous options available.
Choose from Day of the Dead Dress or Grim Reaper, ages 5/6, 7/8 or 9/10, Skeleton, ages 3-10, Unicorn Fairy, ages 3-6, Pirate or Witch, ages 3-8 or Pumpkin, ages 2-4.
It is hard to know how socially distanced and safe trick or treating will be managed but if you are looking to stock up on sweet treats, Aldi also have bumper packs of sweets and sharing bags going on sale on the same day - priced from .97c to €2.94 per bag.
All on sale in 143 stores nationwide from Thursday October 1.
