What’s one of the biggest influences on the decisions we make every day? Money. It shapes the opportunities we have and the choices we make throughout our lives. So, this International Women’s Day, let’s talk about it.
Women in the UK save 35% less than men over their lifetimes. This disparity is reflected in the gender pension gap, which stands at 38%. In simple terms, women retire with over a third less savings than men. Sure, the persistent gender pay gap plays a role, but this issue is far more layered than women’s take home pay.
Women face many economic barriers due to societal expectations. This year’s International Women’s Day theme, ‘Accelerate Action‘, inspires us to break down these barriers and share simple tips to help women take control of their financial futures.
1. The gender pay gap and early careers
On average women earn 13% less than men, with the full-time employee pay gap firmly standing at 7% according to the Office for National Statistics (ONS). By the time women reach 40 - an age often associated with greater confidence and wisdom - the gender pay gap widens to 9%.
One of the biggest factors impacting the gender pay gap is salary negotiations - or the lack of them. Research shows that 83% of men are likely to negotiate their salary compared to only 73% of women. That’s because women often hesitate due to fears of being perceived as ‘bossy’ or disagreeable by their employer. A Harvard Business School study revealed that when women do pluck up the courage to negotiate, their requests are often met with resistance.
This could help explain why men are 41% more likely to move into management roles and nearly twice as likely to hold executive positions later in their careers. Not only does this deteriorate women’s confidence to get ahead, but it puts a dent in their financial wellbeing too.
What you can do:
- research average pay to figure out industry averages;
- seek mentors and get sound advice without the fear of having awkward conversations with colleagues; and
- if you feel comfortable enough, speak to colleagues about your salary - there’s no legislation stopping you from doing so.
If you’re looking for extra resources, listen to episode 25 of The Pension Confident Podcast and hear from our panel of expert financial guests as they discuss their experiences of negotiating pay, as both an employee and employer. You can also watch the episode on YouTube or read the transcript.
2. Marriage, divorce, and financial independence
Marriage can be a financial fairytale, but only if both partners have an equal footing. Too often women focus on short-term budgeting and saving; while men are more willing to invest in the stock market. While practical, this approach can create financial blind spots - especially if the relationship sadly ends.
Relying solely on one partner to be financially savvy or to save for the long-term can be risky, as it leaves the other partner vulnerable in the face of unexpected life changes. For example, studies show that women’s household incomes drop by 33% after divorce, compared to an 18% dip for men. Then come the legal fees, asset division, and childcare costs - together, these can significantly lower a woman’s standard of living.
What you can do:
- maintain some personal financial accounts and savings; and
- plan for financial independence, regardless of your relationship status.
3. The ‘motherhood penalty’ and career breaks
The ‘motherhood penalty’ is real and accounts for 80% of the gender wage gap. Stepping into the world of motherhood has a high price tag, stemming from essential career breaks that can snowball into stalled career progression and paused salary increases. With childcare averaging £14,000 per year for full-time care in the UK, many women are forced out of the workplace altogether.
When women do re-enter the workforce after parental leave, they may face the impossible job of balancing expensive childcare and lower incomes, which are more common due to the flexibility often required for caregiving responsibilities. In fact, each child under five years old is projected to reduce the earnings of a typical mother by 15% in the US. Meanwhile, men see a ‘fatherhood bonus‘ in wages.
This financial impact extends into retirement. Women who take career breaks to care for children or other dependents often face a significant Carer’s Pension Gap, with many missing out on vital pension contributions during these periods. According to PensionBee, two-thirds of people are likely to take time out of work to provide unpaid care, which can lead to poorer retirement outcomes.
What you can do:
- negotiate flexible working to balance family and maintain career growth;
- upskill during career breaks with online courses or volunteering; and
- advocate for affordable childcare, Shared Parental Leave, and flexible work policies.
4. Caring responsibilities and the ‘sandwich generation’
The ‘sandwich generation’ - those juggling care for both young children and elderly parents - is overwhelmingly made up of women. The financial toll? Staggering. It’s no wonder women’s earning potential and pension pots are slashed significantly when they’re twice as likely than men to reduce their working hours or leave their job altogether to prioritise a full-time schedule of caregiving. The cost of care for children and older family members often drives this decision.
What you can do:
- explore whether financial aid is available for caregivers;
- continue topping up your pension (because future you also needs some support); and
- have honest conversations with family members about how to delegate caring responsibilities.
5. Retirement and the pension gap
Where does the domino effect of a gender pay gap, reduced lifetime earnings, career breaks and caregiving responsibilities lead us? A gender pension gap that leaves women with 38% less in their pot than men.
Later in life, this can leave women in a challenging position, with fewer options and less freedom as they navigate the gap between their retirement goals and financial circumstances. The good news? By making smart choices now, you can build towards the happy retirement you deserve - and your ‘future self‘ will thank you!
What you can do:
- start pension contributions early to benefit from compounding returns and review them regularly to see if you can increase them;
- understand your employer pension scheme and ask your employer about contribution matching; and
- consider consolidating old pension pots if you’ve moved jobs to take control of your financial future.
Summary
If we want to achieve gender equality this International Women’s Day and beyond, financial inequality is the harsh reality we need to confront ourselves with.
So, if there’s one thing you can take away from this International Women’s Day, it’s to:
- seek financial education;
- take steps to master your finances;
- look at ways to boost your pension pots; and
- advocate for policy changes in the workplace and beyond.
Why? Because every woman deserves an equal opportunity in life - and that equal opportunity starts with your finances.
Maria is a Freelance Editor and Writer who previously worked as Global Editor at Female Invest. Her writing focuses on gender equality in finance. She’s also written for a variety of other publications including Harper’s Bazaar, The Telegraph, i news, Metro, Glamour and more.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
