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Did you know that building wealth is harder if you’re a woman? The average woman’s retirement income is less than half a man’s. And that’s not all! Women’s savings also lag behind men’s by nearly 30%.
But it’s not for want of trying. With part-time work, career breaks and the gender pay gap, women earn significantly less than men over their lifetime. And that means they have to work a lot harder to build wealth, a decent pension pot or savings.
Here, I take a look at why it’s often so hard for women to build wealth and whether there’s any way they can get building wealth faster.
Women earn an average of 16% less than men throughout their careers. It’s partly because women often choose lower-paid jobs to fit around caring commitments. But it’s also due to missed promotions as many women prioritise their family over their career.
And earning less means that’s it’s harder to find disposable income to add to that pension pot or savings account.
Career gaps hamper building wealth
Many women also take time away from the workplace to look after their children or to care for older relatives. Women are more likely to become unpaid carers than men, and Carers UK estimates that one in four women aged 50-64 has caring responsibilities for older or disabled relatives.
That means many women may have years where they can’t pay into a pension or save up for their retirement.
When mums return to work after having children, they often chose to go part-time to fit around school pickups. That means they earn less, but it also means they may be less likely to get promoted at work.
And part-time work means there’s less spare cash for women to pay into savings or pensions.
The tax system makes building wealth harder
The tax system means that it can make sense to pay more money into the higher earner’s pension if you’re part of a couple. That’s because higher earners get 40% pension tax relief whereas non-earners can only pay in a maximum of £2,880 per year into their pension.
That means stay-at-home mums or full-time unpaid carers can miss out at the expense of their partner’s pension.
Smaller pension pots and savings
By the time women reach retirement, all …….