Women on average will retire with significantly less money than men, according to studies conducted worldwide, and some one-third of women rely on their partner’s pension as their main source of funding in retirement. This is putting many women in a vulnerable position, especially if they were to separate or divorce – they may find they have less to retire on than expected.
Women generally earn less than men overall, throughout their careers – limiting the amount they can save for retirement. For example, women are more likely to take career breaks, reduce their hours to look after children or elderly parents, and live longer – affecting their pension contributions and retirement income, which may need to be stretched over a longer period of time the longer they live.
1. Maximise your pension contributions. You can free up more cash which could go towards your retirement. For example, just by giving up buying takeaway coffee for a year, you could save (€208 a year). This way you can add as much as possible to your private pension retirement savings and make the most of the applicable tax relief incentives in force.
2. Start saving more. The more you save now, the more you’ll have to retire on. Plus, the more time you’ll give that money to grow. Think about whether you could generate any extra income for your retirement from a hobby or side job.
3. Consider investing. If you can put money aside, you might consider investing into a stocks and shares on top of your pension. There’s still time for your money to grow and an investment could give you more flexibility than investing in a pension.
4. Make the most of joint allowances. If you’re married, in a civil partnership or in a stable relationship with shared assets, it could make sense to look at both your pensions and savings together. Ġemma’s retirement calculator [link] can help you work out the joint cost of living – as two can retire more cheaply than one.
5. Adjust your retirement plans. Think about whether you can delay when you finish work . If that’s an option, it may make sense to change where your pension is invested. Switching to reduced working hours or “semi-retirement” can also provide more financial security, apart from a better work-life balance.
Here are some tips which could help you in your retirement financial planning:
1. Check your social security contribution (SSC) record. If born between 1952 and 1961 you will need 35 years’ worth of SSCs to receive the full two-thirds pension. These may include credited contributions (e.g. for periods of unemployment, sickness or invalidity, carers’ allowance, breaks in employment to care for your children, and for study). The minimum contribution requirement to qualify is 10 years of contributions.
You can check the number of social security contributions paid or credited to your account at [link]. If you have gaps and do not yet satisfy the 10 years requirement to qualify or the 35 years requirement for a full pension, you can pay up to 5 years of contributions through an online application – [link]. Arrears are payable at the lowest self-employed rate as per [link].
2. Save into a pension – even if you are not working. If you are single and not working, but deriving an income from rents, bank interests etc, you can pay a class II contribution at one of the applicable rates as per [link] . Further information is available at [link] . This is not applicable if you are married.
3. Top up your pension. You have the option to supplement your two-thirds pension by investing in a private pension plan or in an occupational pension through your employer. Such plans are available from several private financial institutions such as the major banks and insurance companies. See the tax incentive at [link] [link].
5. Delay taking your state pension. You can now delay claiming your pension and benefit from a pension rate increase. Subject to certain conditions you can claim your two-thirds pension prior to your pension age or, if you have reached your pension age but opt to defer your pension claim and continue in employment or self-employment, you will be eligible to an increase in your pension rate: a deferral of one year translates into a 5% increase; one of two years into a 10.5% increase; one of three years into a 16.5% increase; one of four years into a 23% increase.