Baby boomer women could be facing a more difficult retirement challenge than their male counterparts according to Official figures released recently.
They reveal that the average baby boomer woman in the U.K. retiring over the next decade will face a pension pay gap equivalent to just over £2,000 a year compared to our male counterparts.
As a result of this it seems many baby boomer women will be facing an impoverished old age.
Overall the figures show a typical man gets £180 per week from his state pension plus any S2P, previosuly SERPS, the state-earnings related pension scheme. In comparison women are expected to get £120.per week.
Many baby boomer women don't have occupational pensions, even though in recent years women part-time workers won the right to join occupational pension schemes.
Only one third of women have an occupational pension compared to two thirds of men. The average 56 year old woman has just £9,100 of private pension savings compared to £52,800. for a man of the same age.
It's bad news on the Annuity front also. As a baby boomer woman even if you have a decent pension pot and go out into the market place to buy an Annuity you will get less for your money than men simply because you are expected to live longer.
It seems that baby boomer women have been penalised for the years they took out of the work place to care for their children with many of us usually going back into part-time work until the children were older.
Unlike the generation of parents today who usually only take their maternity leave and then pick up their careers without losing out on salary and pension contributions.
The majority of baby boomer women therefore had a much shorter working life added to the the fact that historically baby boomer women have earned 17% less than men in a similar position. Even following the Equal Pay Act some 20 years ago the average women's pay is less than half that of men.
There are other factors that may contribute to a lack of a reasonable income for women in retirement.
Baby boomer women usually marry older men so at some point will probably face widowhood on a reduced pension.
The divorce rate for baby boomer women has climbed over the past few decades which means they have no spouse's pension to fall back on. Indeed many baby boomer women have chosen to live a single life for whatever reason and will struggle on a single pension compared to couples.
The baby boomer generation are also known as the sandwich generation with financial responsibilities for grown up children, grandchildren and elderly parents.
In reality the finances of the baby boomer woman are not quite what they should be at this stage in their lives. On the
otherhand we have become accustomed to a very generous lifestyle and will be reluctant to give it up at a stage in our lives
when we should in fact be planning more of the same.
Is freedom beckoning or do you carry on working for a few years longer to prop up the old finances whether you like it or not?
Your decision will probably be based on whether you have enough in the pension pot to be able to enjoy a reasonable standard of living. If you haven't already worked out what you can expect on retirement do it now.
If you belong to an occupational pension scheme you should be provided with an annual statement which will give the figure you can expect to receive on retirement.
The sooner you have all the facts, the easier it will be to assess the situation and make your decision.
To find out the amount of the basic state pension for the current year go to www.gov.uk/state-pension. If you paid into SERPS (State Earnings Related Pay Scheme) it will be more.
Many people believe that everyone is entitled to the basic state pension but this is not true. Until recently a woman needed 39 years National Insurance contributions to qualify for a state pension and men 44 years.
This has thankfully now changed under the
new Pension Rules
recently announced. Since April 2010 the number of qualifying years
required for both men and women is currently 30 depending on when you
were born. This is about to change to 35years under the flat rate pension proposals.
The retirement age for women was raised some time ago from 60 years to 65 years to bring them in line with men. However under the new rules the retirement age for men and women is set to rise to 66 years by 2020.
This means that for baby boomer women born after 6th April 1950 - 5th April 1955 the retirment age will be between 60-65. Women born from the 6th April 1955 will have a retirement age of 65. However it doesn't stop there between 2024 and 2046 the retirement age for women will increase to 68 years.
Go to Direct Gov and scroll down the page until you see the Pension Calculator. You can complete this to find out whether you will qualify for a full state pension.
You can also request
a state pension forecast
if you are unsure how much you can expect to receive. If you don't
qualify for the full state pension don't panic. You may be entitled to pension credit
or other benefits. Even if you have a full state pension you still may
qualify for other benefits if you have less than £10,000 in savings. You can find out all this information at the same link.
You can also find out how to increase your state pension if you carry on working past retirement age by deferring your pension.
Women will be the main winners under the proposed Flat Rate State Pension Reform Proposals.
Women in their mid to late fifties will lose out if the proposed Pension Reform Bill on Age goes through.