High levels of debt, low earnings and a lack of financial confidence are combining to put millennial women at a greater risk of poverty in old age, according to a report from Insuring Women’s Futures.
The initiative from the Chartered Insurance Institute brings together members of the insurance and financial planning industry as well as policymakers and consumer groups to raise awareness of the financial challenges being faced by women and develop ways to tackle them.
It found that student debt has almost doubled between 2001 and 2017. However, women are less likely than men to be able to repay those debts within a 30-year timeframe because their earnings are lower.
Female teachers, social workers, nurses and midwives are all expected to have between £29,000 and £49,000 in outstanding debt after 30 years in work. In some sectors, the reports said that it took women 13 years more to pay off their student debts, making it harder to save for their futures.
Problems are also being exacerbated by increasing levels of consumer debt – particularly amongst younger women. The report says average debt of women aged between 15 and 24 grew by 200% between 2006 and 2012. This increase is 10 times the rate witnessed in the population as a whole.
In addition to having higher levels of consumer debt, women are also less able to repay it. The report blamed this on an ongoing gender pay gap, an increased chance of taking a career break to raise children and then returning to work in a lower paid job. It also said that women working part-time are likely to earn 30% less an hour than women in full-time employment.
Although young women are more likely to save than men – 1.5m 25-34 year- old women have an individual savings account (Isa), compared to 1.38m men – their financial circumstances mean they are not able to save as much. The average Isa balance of a woman in this age group is £5,118, compared to £6,180 for men. This trend continues through life and by age 65 men are likely to have saved five times more into a pension then women – with average pension pots standing at £179,091 and £35,700, respectively.
Women are also more concerned about their ability to manage their finances, with over half (52%) of women in their late 20s saying they do not understand retirement savings. This compares to just 37% of men.
Jane Portas, Insuring Women’s Futures Committee lead on Women’s Risks in Life, lead author of the report and PwC Partner, says: “Women continue to have a fundamental lack of financial resilience to the risks they face in life. Many of the issues leading to women’s exposure to risk are deep rooted in society and will only get worse for the next generation unless we act now. We need to find new ways of educating and engaging young women and put policies in place that support them throughout their life. As a society, we need to improve women’s risk protection, economic independence and financial resilience, improving the financial future for us all.”