Average woman's pension could run out a decade sooner than men, shock research shows

The average woman’s pension could run out within seven years of them retiring - and a decade less than for a typical man - because of a shocking gender divide, research suggests.

Women typically retire with pension pots that are about half the size of men, often because they are more likely to take career breaks looking after loved ones or have part-time jobs. But it means they are at greater risk of being hard-up old age, especially as they have a longer life expectancies.

Government data released earlier this week revealed that, between 2020 and 2022, the average woman had £81,000 in their pension pot by the ages of 55 to 59, compared to £156,000 for men - a glaring gap of 48%.

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Online platform Interactive Investor used the data to number crunch what it would mean for workers when it comes to retirement. According to the firm, a woman with an £81,000 pot could run out of money after just seven years, at the age of 74. Its calculation is based on a number of assumptions, including that they withdraw £11,000 a year from their pension. In contrast, a man who retires with a pension pot worth £156,000 and withdraws an income of £11,000 each year could see their pension pot last for around 17 years, until the age of 84.

The stark difference is despite the fact that, on average, women live longer than men. According to the Office for National Statistics, male life expectancy in the UK was 78.8 years for males and 82.8 years for females in 2021 to 2023.

It comes amid concerns that the situation could worse if the state pension age is increased, after the government kicked of a review three years early. The age people can start claiming the state pension is already scheduled to increase from 66 to 67 between 2026 and 2028, then to 68 between 2044 and 2046. The government is unlikely to make any decisions on further increasing the state pension age to 69, or the timetable - before the next election, due in 2029.

The Institute for Fiscal Studies has recently suggested that, in order to maintain the triple lock pension promise, the state pension age would need to rise to 69 by 2048/49, and then 74 by 2068/68.

Camilla Esmund, senior manager at Interactive Investor, said: “We’ve long been vocal on the need for the gender pension gap to be given the urgent attention it demands, as well as the importance of greater pension engagement in the UK more broadly.
“Interactive Investor’s calculations are for illustrative purposes but are indicative of the scale of the challenge for women approaching retirement.

“The gender pension gap means that thousands of women risk having little to supplement the state pension. “Despite having lower pension values, women live for longer on average in retirement, and are often left struggling financially in old age once their pension wealth has dwindled.

“Women still face multiple and systemic hurdles when it comes to building pension wealth. The pay gap plays a key role here, as do other barriers. They are more likely to work part-time or take time out of the workplace to care for loved ones, leading to a lifetime of lower contributions and the potential for a smaller pension pot in retirement.

“It’s important to acknowledge these challenges because without research and data reflecting the true realities of pay and retirement planning, we won’t be able to address the gap meaningfully.”