7 financial issues only women face and what to do about it

8th March 2024 marks International Women’s Day and this year its theme is “Inspire Inclusion”.

We’ll all be asked to imagine a diverse, equitable, and inclusive world free of bias, stereotypes, and discrimination. It’s also a day to raise awareness of the issues we all face.

In the world of finance, we at Jane Smith Financial Planning see this every day.

From the gender pay gap to State Pension shortfalls following a Department for Work and Pensions (DWP) error, and a worrying rise in financial abuse, some financial issues are disproportionately women’s problems, either through only affecting us or by hitting us hardest.

But seeking professional financial advice can help.

Here are seven financial issues that could be affecting you, and what you can do about it.

1. Employment gaps and part-time employment can negatively affect your pension pot

There are many factors influencing the gender retirement gap but pay and working hours play a significant part.

The Office for National Statistics (ONS) confirms that the gender pay gap in 2023 stood at 14.3% among all employees and the gap starts to widen at 30. This is the mean age when women looking to start a family will become pregnant for the first time.

Time spent out of work, or in part-time employment, to raise children can affect your salary and this has a knock-on for your pension contributions.

Later in your career, menopause can also have an impact. Royal London recently reported that menopausal symptoms mean women are more likely to leave work in their 50s – at a time when you’ll likely be earning the highest salary of your career.

Sadly, the current truth is that women will need to save a higher proportion of their salary and start earlier, to retire with the same size pot as a comparable male.

2. State Pension issues for married women

A historic DWP error has meant that an estimated 237,000 women (and some men) have been underpaid their State Pension.

The BBC reported back in 2022 that this figure is 105,000 more than the DWP originally calculated and amounts to nearly £1.5 billion in underpayments.

You could be affected if you:

  • Are a married woman receiving zero basic State Pension, even if you are receiving a small additional state pension (“SERPS”), or graduated retirement benefit
  • Are a woman whose husband reached age 65 before 17 March 2008 and you’re currently receiving less than 60% of his basic State Pension
  • Are a woman who got divorced after reaching State Pension Age and the amount you are paid has yet to be reassessed
  • Were out of work for any length of time between 1978 and 2010 and claimed Child Benefit or Income Support as a carer for someone with a disability or long-term illness.

If you think this might be you, get in touch now. Your State Pension might not be your main source of retirement income but it is a solid foundation on which to build. We can help make sure you’re getting your full entitlement.

3. Risk-aversion and the gender investment gap

As we have seen over the last few years, market fluctuations and economic turmoil are part and parcel of the financial system.

Long-term investments can help to ride out these short-term crises and keep you on track to your goals. However, reports suggest that women are traditionally more risk-averse than men.

When the Consumer Prices Index (CPI) reached a 41-year high of 11.1% back in October 2022, it far exceeded average savings rates at the time. Your cash was effectively losing value in real terms.

Take the time to think about your attitude to risk and your goals. Investment returns and compound growth throughout a long-term investment could make a huge difference.

4. A DIY divorce could leave you out of pocket

The introduction of so-called “no blame” divorces saw a huge rise in cases back in 2022.

But the new rules, which make divorcing quicker and easier, could mean you miss out on your entitlement to a partner’s pension.

PensionsAge confirms that only 7% of divorcees said they would seek financial advice, while only 12% of couples consider pensions as part of divorce proceedings.

Private pension wealth usually makes up a huge part of an individual’s wealth so be sure you get the share you deserve.

5. Not being the main breadwinner can lead to a lack of engagement

The role of looking after household finances can often fall to one partner in a relationship. Often this will be the main breadwinner.

This, though, can lead to the other partner feeling disengaged from the process. But this is a mistake.

There are benefits to organising your finances as a couple so if you tend to leave financial matters to your partner, try to get more involved.

Not only are two heads better than one but aligning a plan to shared goals gives you both a sense of purpose and control over your financial futures.

6. Financial and economic abuse by a partner is more likely for women and can last longer

FTAdviser recently published the results of an Alzheimer’s Society ‘Loss of Mental Capacity: A Global Perspective’ report. Among its findings was a rise in financial abuse.

Aviva recently found that 40% of Brits may have suffered financial or economic abuse in adulthood.

While men are more likely to admit to being victims than women (53% v 34%), men are less likely to be victims of abuse by a partner (33% v 47%).

For women, the abuse is likely to last much longer, with 40% of women saying the financial or economic abuse they suffered lasted for years or is ongoing, compared to just 25% of men.

7. It can be hard to find an adviser you trust if you have always used a partner’s adviser

If you and your partner have the same adviser, if your partner dies or you divorce, you might find that you don’t have a sufficiently strong bond with the adviser to maintain the relationship.

But if it’s not a space you’ve entered before, finding a new adviser can be tough.

At Jane Smith Financial Planning we’re knowledgeable, friendly, professional, helpful, and trustworthy. And you don’t need to take our word on that.

Read the top 10 pieces of feedback we received last year and see what our clients are saying about us.

And, if you already know about the great service we offer, consider recommending us to a friend.

Get in touch

If you have any questions about your financial journey and the unique problems you face, speak to us now. Please contact us on info@janesmithfinancial.com or call 01234 713131.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

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