International Women’s Day takes place on 8th March and this year’s theme is Accelerate Action for gender equality. There is still a big disparity between men and women when it comes to income and savings. We look at some of the ways women can take control of their financial futures to build wealth and to achieve financial independence.
Did you know that only 16% of all financial advisers in the UK are women? At Balance: Wealth Planning, three of our five financial planners are women, and 100% of our board are female or from a minority ethnic background. We’re very proud of this achievement, and we are committed to helping our female clients feel more empowered about their finances.
Women’s pensions and the gender wealth gap
The Gender Pensions Gap (GPeG) is still around 35% between men and women’s pensions. Also, research estimates that women tend to work an extra 19 years to reach the same private pension wealth level as a man. Although there has been movement in recent years towards closing this pensions gap, there is still a long way to go.
One of the causes is the Gender Pay gap. Women are still earning around 14% less than men, which means they have less income to contribute to pension savings. Another cause for this disparity is the fact that women are more likely to work part-time or take career breaks to care for children.
Lower lifetime income for women has a direct impact on their financial security in retirement
According to the FCA’s Financial Lives Survey, women are nearly twice as likely as men to have low financial capability. Also, one in three women said they had low financial confidence.
One way to increase your overall household pensions savings is to contribute to your partner’s pension. According to UK Retirement Confidence research by Nucleus, 78% of people were unaware they could make contributions to another person’s pension. 21% of this group said they would consider contributing to another’s pension. It’s also worth noting that you don’t need to have a familial connection with someone to contribute to their retirement.
Steps women can take to secure financial independence
It’s essential that women are empowered to take charge of their financial independence.
There are some simple steps you can take, which include the following:
- Third-party pension contributions – if you have low pension savings, you might be able to contribute to another’s pension and help to build collective pension wealth. You would need to be aware of any pension allowances, for example, the current annual allowance is £60,000. However, if you have a partner who’s a higher-rate or additional rate taxpayer, they can claim an extra 20% of tax relief on their earnings.
- Tax-efficient savings – if you have a mix of savings or cash in a standard bank account, it is worth considering transferring this into an ISA. More women hold ISAs than men, yet the gender ISA gap is £6.6bn. There is a maximum tax-free allowance of £20,000 and you can choose between a Cash ISA, Stocks and Shares ISA, or a mix of both. Depending on your age and objectives, other types of ISA may also be a suitable way for you to save.
- Diversified investments – if you have a small savings pot and you are interested in making your money grow, then you could consider investing. You don’t have to hold large amounts of money to become an investor. There are also different ways to invest, including responsible investment options. According to Warwick Business School, women investors tend to outperform men by 1.8%.
The role of financial planning in building long-term wealth
Financial planning holds the key to building women’s long-term wealth. A realistic financial plan will enable your money to work harder for you. It will also help you to build your wealth effectively with sensible investments and adequate protection.
As an example of how our financial planning process works, we would start by talking to you about your goals, vision, and any concerns. It’s important to get a full picture of where you are now and where you want to be. We would consider your aims and aspirations, as well as reviewing your current income, pensions and savings. Our team would also carry out a cash-flow planning exercise and we would advise on tax-efficient ways to save.
When your financial plan is created, this will give you more clarity, purpose and confidence about your finances. Our aim is to not only help you achieve financial security, but to feel more empowered to work towards your life goals. Financial planning can help you change your life for the better, and most importantly of all, you will have peace of mind.
Financial Advisor and Pension Advice, West Bridgford
At Balance: Wealth Planning, we support International Women’s Day because we believe women need to become more empowered when it comes to their finances. By taking control of your financial future, you could also enjoy a better lifestyle today.
Our female board are committed to providing transparent financial advice and clear fixed fees, based solely on our clients’ personal goals. We can review your pensions and help you make use of any tax-free allowances. Our financial planners will create a financial forecast to check that you have enough savings and pension income to ensure your financial security.
If you’re a woman and you’d like to book a consultation with us to help assess your financial future, please get in touch
Sources:
https://www.internationalwomensday.com/Theme
https://professionalparaplanner.co.uk/technicalzone/third-party-contributions-and-the-gender-pensions-gap/
https://nucleusfinancial.com/about-nucleus/our-company/confidence-index?utm_campaign=Confidence%20Index&utm_medium=email&_hsenc=p2ANqtz-8Ll7VAdK3ygiPhJ_0Smmq6eBdgGtgEg2X4CAdP7c-3M4v0GK1d0L4_-06Fwyg7EosdgEcNQN1vMUssMBehHEQWp78jGQ&_hsmi=313241671&utm_content=313241671&utm_source=hs_email#six-month)
https://www.charles-stanley.co.uk/insights/commentary/are-women-better-investors-than-men
More women than men hold Isas but gender Isa gap still stands at £6.6bn | Money Marketing
