Why are women facing poverty in retirement?


lonely senior citizen woman in...

The TUC has released some worrying figures about women being forced back into work because they can't live comfortably in retirement.

The trade union state that 2.27 million more women are working that in 1992 and three out of four of them – 1.64 million –are aged 50 or over .

It blames the failure of private and state pensions to provide an adequate pension, meaning women are forced back to the grindstone. Of course, we cannot take a totally negative view of women in work, it's fantastic that women are no longer confined to the home and that attitudes to older workers have changed to ensure they are given greater opportunities and can stay in work.

And let's not forget that a lot of people want to work, and at age 50 you're still fit and healthy so why shouldn't you be working?

There is lots of blame pointed at the lack of saving for the meagre way women are forced to live in retirement but what about the failure of the annuity market to provide for women after their spouses have died.

Traditionally women have saved less for retirement than men, who went out to work while their wife stayed at home to raise the children. The problem with this is at retirement when only the male spouse had a pension to turn into an annuity income.

According to pension expert Ros Altmann, the majority of pensioners buy a single life annuity rather than a joint life annuity, the former stops paying out when the husband dies while the latter continues to pay out to a spouse.

The reason most people opt for a single life annuity is not because they want to leave their spouse in poverty, it is because it pays out less income each year because it covers two lives. People just don't understand that.

Of course we need to save more to cover our own backs in retirement, rather than relying on a spouse – two incomes are better than one – but we also need to educate those for whom it is to late to save for their own retirements that they need to cover themselves in the event their spouse dies, especially as women are likely to outlive men.

It may be tempting for retirees to take increased cash now but it can lead to future poverty.