International Women’s Day: 5 things you could do to improve your long-term financial wellbeing

This year’s theme for International Women’s Day is “embrace equity”. While huge strides have been made in improving financial independence for women, there’s still a significant gap. It could harm your overall wellbeing and your options in the future.

If you want to take steps to improve your long-term financial security, there are things you can do now.

1. Don’t overlook your pension

Your pension is often important for financial security later in life. A report from Royal London suggests that pensions are something just 12% of women feel very confident about, compared to 21% of men.

The research also found that women are more likely to be concerned about a range of retirement challenges, including running out of money during their lifetime and not leaving a legacy.

Taking the time to understand your pension and how it’ll grow during your career could help put your mind at ease. It’s also a process that could help you identify a potential shortfall sooner and mean you have more time to bridge a gap if necessary.

One of the reasons women often have less in their pension when compared to men is that they’re more likely to take career breaks. Even if you’re not auto-enrolled into a pension by an employer, you can continue making contributions to either an existing pension or a new one.

If you pause pension contributions, you should still review your savings. It can help you understand how your pension investments are performing and whether you’re on track to reach your long-term goal.

2. Review your State Pension

As well as your retirement savings, the State Pension is often crucial later in life. As it will provide an income from when you reach the State Pension Age, it can provide some certainty and help you cover essential outgoings.

On average, women receive less from the State Pension than men. According to government figures, men that have retired since 2016 received an average of £160.09 from the State Pension in 2022/23. For women, this falls to £152.90.

How much you receive from the State Pension depends on your National Insurance contributions (NICs). Women are more likely to take a career break or work part-time for a variety of reasons, such as raising children, which could affect their NICs.

Usually, you will need 35 qualifying years on your National Insurance (NI) record to be eligible for the full State Pension. If you have fewer years, you’ll usually receive a proportion of the full amount.

You can check how many years are on your NI record and how much you could receive from the State Pension by using the government’s State Pension forecast tool. This can help you understand how much you’re likely to receive when you retire and fill potential gaps.

As well as checking your NI record, you should also check if you’re entitled to benefits that could boost your NI qualifying years. For instance, if you apply for Child Benefit and your child is under 12, you’ll automatically receive NI credits, even if your family isn’t eligible for financial support. It’s a step that could improve your financial wellbeing later in life.

3. Understand when to save and invest

Research from the Royal Mint suggests there is a gender gap when it comes to investing. The findings indicate that women are more risk-averse and feel less confident about their investment knowledge.

26% of women said they invest regularly, compared to 53% of men. If you have long-term goals, investing could provide you with a way to grow your wealth over a long time frame. With women less likely to invest, it could mean that many are missing out on potential returns by opting for cash accounts instead.

If your saving goal is more than five years away and your financial position is secure, considering investing could make sense. While returns cannot be guaranteed and investing involves risk, you can invest in a way that matches your risk profile. It could help you get more out of your money.

4. Review your finances when your circumstances change

Taking stock of your finances when your circumstances change can help ensure you remain on track. From changing careers to having children, many life events can affect your finances as well as your priorities.

By reviewing your finances regularly, you can identify potential challenges or opportunities.

One example of why reviewing your finances is important is that women are often negatively affected financially when a relationship breaks down.

The Royal London study stated that women typically walk away from divorce “substantially worse off” than men, especially when pensions are considered. A divorced man aged 45–54 on average has pension wealth of £42,000, compared to £16,000 for women. This is often because a pension is not viewed as a joint asset, but a review could highlight where women are missing out.

5. Book a meeting with a financial planner

Seeking professional advice throughout your life can be valuable and it could help you make the most of your assets. It can help you understand the steps you need to reach your goals as well as things like how you could reduce your tax bill.

The Royal London report suggests that men are more likely to discuss money matters with third parties. For instance, while 73% of men would discuss their money with a financial institution, 66% of women said the same. It could mean some women are missing out on advice that could improve their financial wellbeing.

Booking a meeting with a financial planner allows you to ask questions, understand if you’re on track, and create a tailored plan that considers your goals. Please contact us to arrange a meeting.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

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