Women over 40: Get a handle on your pension

If you’re a female aged 40 or over, it may be – for any number of reasons – that you haven’t built up as big a pension as you’d hoped for to meet your retirement goals.

Don’t worry, as all is not lost! A comfortable retirement is still within reach – it may be that you just have to approach your plans in a different way, which is where a financial adviser is invaluable.


  • The gender ‘pensions gap’ is well known. According to the Pensions Policy Institute, women in their 60s retire with pensions a third smaller on average than those of men.1
  • The main reason behind this is the knock-on effect of women’s lower average earnings during their working life as well as time out of paid work to raise a family. Yet high-earners and those without dependants can nevertheless end up behind their male counterparts when it comes to retirement provision, too.
  • There’s more than one way of funding your retirement – and your Wellesley financial adviser can help you understand how your retirement is currently shaping up and how much you need to save to ‘catch up’.

Be mindful of the gap

The gender pay gap debate often makes the headlines, but what about addressing the lesser-known issue of the ‘pensions gap’ between men and women? Women are likely to retire with a much smaller pension than that of men, which is broadly due to their lower average earnings, as the pay gap still stands at 15.5 per cent.2

Most people save a proportion of their salary for retirement – meaning earning less results in saving less, too. Together with higher rates of part-time work and breaks from paid work to focus on families, it’s little wonder why many women have to work that much harder to secure a comfortable retirement.

Not only that, but high-earners and those without children can also fall into the gender pensions gap, as many women who concentrate on forging a successful career can end up putting their own finances on the back burner.

As the old adage goes, ‘the early bird catches the worm’, which equally applies to planning and saving for retirement. However, if you’re in the middle of your career and are unsure of whether your retirement savings are sufficient, all is not lost. You can still play ‘catch-up’ to align your plans with your dreams, but you just might have to take a different approach.


Consider the energy and precision you’ve applied to your career – and now channel this same spirit towards your retirement planning. Don’t worry, as this doesn’t mean becoming a pensions expert overnight! That’s where a financial adviser comes in – they can provide you with clear financial goals and advise as to what you could do to help achieve them.

Your adviser will need to know details of any pensions you have. They can also help you get a better understanding of what type of schemes you’re in, which could be Defined Contribution, Defined Benefit, or a small self-administered scheme, and what you would be entitled to in retirement.

Furthermore, you’ll need to share what other assets you have, including ISA savings, premium bonds, investments, property and, if you own a business, its likely value.

Take some time out to consider what kind of future you really want. For example, do you want to aim for a hard stop from work at a set age, or do you plan on continuing to work in some capacity? Does starting a new venture at a later stage appeal to you? Or perhaps you dream of moving abroad – in which case there are particular tax implications to take into consideration.

Three ways of funding retirement

It becomes much easier to understand the financial goals you need to meet once you’ve got some answers to the above. There are a range of assets you can use to fund retirement – each coming with its own advantages and disadvantages.

1. Pensions

The majority of people are allowed to put a maximum of £40,000 per year into their pension or 100% of their earnings if less (however, there are rules relating to this for higher and lower earners, so do check with your financial adviser) – and they receive tax relief on top.

Be sure to put away as much as possible into your pension, but be mindful of the lifetime allowance, which is a limit on how much an individual can build up in pensions without incurring a tax penalty – currently £1,073,100. There are tax penalties for exceeding the limit; however, in some circumstances, you may be able to apply for ‘protection’ against the charges.

If you have one or more pensions, it may be wise to consolidate them into one pot to avoid extra charges. ISAs and other portfolios of investments can also provide a source of retirement income in if invested effectively.

2. Property

Many people aged 40 and over no longer have substantial savings goals at this stage of life, such as a deposit for a home or a wedding.

This means that you may be in a position to channel more of your income towards paying down a mortgage or purchasing an additional property, which could then be rented out and provide an income stream in retirement.

Another option could be to downsize to a smaller home at a later stage, which might leave you with a lump sum to help fund your retirement.

3. Businesses

Many entrepreneurs end up putting everything into their business in the hope of selling it one day to fund their retirement or provide an annual income. While these may be feasible options, it’s nevertheless important to be realistic about how much your business is worth today and its possible future value.

It’s wise to be supported by a range of assets in later life, so it might be worth discussing this with your adviser as to whether some of your savings would be better invested elsewhere.

If planning for a comfortable retirement is on your mind, speak to your Wellesley financial adviser – with a range of ways of funding retirement, there’s still time to formulate a plan and catch up with your savings so you’re on track for your retirement goals, whatever they may be.


1 Understanding the gender pensions gap, Pensions Policy Institute, July 2019
2 Gender pay gap in the UK: 2020, Office for National Statistics, November 2020

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