Mná na hEireann, listen up. Whether you are single, married, in a relationship, widowed or divorced, you need to tune into retirement planning rather than tune out. If you are married or in a relationship, it is not good enough to let the hubby take care of ‘all the money stuff’.
Recent research by HerMoney into women’s financial affairs revealed that 64% of the working women surveyed felt they could not afford to put money into a private pension, yet only around one third, 36%, expect to have enough money to last through retirement. How many of those 36% expect to rely on their husband’s pension arrangements? In my opinion, this is a cop out.
There are a couple of simple reasons why it is imperative that you get actively involved in planning for your later years.
- You will outlive your partner
In Ireland, women outlive men by 3.7 years which means that if you are married, you may have to make your pension last longer. Add to this the fact that you may have married a man older than yourself. If he was the main earner, you need to know what happens to his pension when he dies so that you can figure out where that leaves your finances.
- Your pension pot is smaller
There are many reasons why women’s pension funds are smaller than men’s. There is the gender pay gap, which has only very recently been thrust into the spotlight, therefore if you are at or near retirement age, you are likely to have been underpaid relative to men for the majority of your career. You may have taken time out to rear children or may have scaled back your working hours to care for aging parents, both of which choices can affect the state pension and any private pension fund you might have.
- You are single
Points one and two above apply in this case. You can expect to live to the ripe old age of 84, but you will not have the additional income in retirement from a spouse’s pension fund, whether state or private. You’ll have to do it all on your own from a smaller fund.
Dig out all your pensions
Whether single or married, you need to uncover all the pensions you have – there could be pensions from old jobs or pensions overseas. Are they DB (Defined Benefit) schemes? How much are they worth? What are the rules? What other sources of income do you have for retirement (eg shares, rental income, an expected inheritance)? If you are pre-retirement, what is the Normal Retirement Ages (NRA) for each pension, the age at which the pension may be drawn down? To figure out whether you will be entitled to the full state pension, you can ask the Department of Social Protection to give you a print out of your social insurance contributions.
If married, you need to do the same research on your husband’s pension provisions. I say you need to, but of course he also needs to, so you will ideally do this together, but my point is, do not switch off when it comes to his arrangements. Statistically, it is likely that you will be left holding the ball for a few years at least.
So now try to imagine the widowed you, perhaps in your 80s, searching through old filing cabinets trying to figure out where on earth his income was coming from. Aside from the inconvenience, it will be much too late by then to take any remedial action should your collective arrangements prove to be inadequate.
The HerMoney survey found that 20% of those who did not have a pension admitted it was because they did not understand pension funds, and this could well be why women can sometimes tune out when the man is transitioning to retirement.
There is no doubt that it can get complicated where, for example, there is a second marriage or divorce. Overcome this stumbling block by approaching someone like me who specialises in helping people prepare for retirement. I can help you through these essential steps to ensuring you get to enjoy the life in retirement you had hoped to.
Do it now when there are options such as making tax-efficient contributions to your pension or his, or planning to work part-time for a number of years so that you can stagger the drawing down of your various pensions to make them last longer.
As Cheryl Sandberg would say, lean in. It will give you huge peace of mind.