Reasons why women need to save more for retirement than men

4 March 2025

SHARE:

This International Women’s Day, while we celebrate the incredible achievements of women, let’s also talk about something less thrilling but just as important – money. More specifically, why women need to put away more for retirement than men.

The reality is that women face financial challenges that can make retirement harder to plan for. Longer life expectancy, career breaks and the ever-present gender pay gap all add up to a bigger retirement savings burden.

Here, we break down the top five reasons why women need to save more for retirement than men.

1. Women live longer - which means more years to fund

Good news: Women tend to outlive men. Bad news: That means needing more money to sustain those extra years. According to the UK Office for National Statistics, the average woman can expect to live to 82.9, while men average 79.0. That’s nearly four extra years of retirement to finance!

And let’s be real, those extra years aren’t just for sipping cocktails on a beach (though we hope some of them are!). With rising costs and inflation, a longer retirement means more savings are essential to maintaining a comfortable lifestyle. Simply put, living longer is a blessing, but it also comes with a bigger price tag.

2. Healthcare costs - longevity comes at a price

Living longer is great, but it may also mean dealing with more healthcare expenses. A 2024 report from the National Academies highlights that women are more likely to experience chronic illnesses, which often require specialist care and, eventually, long-term support—all of which can be costly. Additionally, research from NRS for You reveals that women typically spend more on healthcare costs than men. These expenses, which are unlikely to be covered by insurance, include treatments, assisted living and in-home care services.

To avoid financial stress and instead ensure financial stability later in life, planning and factoring in these additional costs is key.

3. The pensions gender gap - less pay, smaller pensions

It’s no secret that women, on average, earn less than men. A lower salary doesn’t just impact day-to-day spending, but it also means lower pension contributions and, ultimately, a smaller retirement fund. Many workplace and state pension systems don’t fully account for career breaks or part-time work, both of which disproportionately affect women.

The result? Women often end up with significantly less in their pension pots than men, despite needing more. That’s why it’s crucial to start saving early, take advantage of employer pension schemes and consider additional investments to bridge the gap.

4. The investment gap – playing it too safe could cost you

Ever heard the phrase, “No risk, no reward”? Well, when it comes to investing, women tend to be more risk-averse than men. While being cautious isn’t necessarily a bad thing, it can mean missing out on potential long-term growth.

Studies show that women are more likely to keep savings in low-risk options like cash or bonds rather than investing in stocks, which historically offer higher returns over time. The result? A smaller retirement fund than if those savings had been put to work in higher-yield investments.

The good news is that investing doesn’t have to be intimidating. With the right guidance from an independent financial adviser, women can grow their wealth without taking on unnecessary risk. It’s key to start early, stay informed and not be afraid to take advantage of investment opportunities.

5. Career interruptions and caregiving responsibilities

Many women take time off work to raise children, care for aging parents or support family members. While these career breaks are invaluable for families, they can seriously impact long-term earnings and retirement savings. According to a study by Barzallo et al, two out of three family caregivers are female and while caregiving trends are shifting, women still report a higher overall caregiving burden than men.

These career interruptions often lead to: • Fewer years contributing to workplace pension schemes • Lower lifetime earnings, reducing overall pension savings • Missed opportunities for salary progression and employer pension contributions

The takeaway? Whether planning to take career breaks or not, it’s important to factor in their financial impact and find ways to keep retirement savings on track such as investing in personal pension plans, spousal contributions or starting an individual savings account.