Why women are more at risk of their private pension pot running dry

Legal & General (L&G), which published the research, said that, with the average life expectancy of a 60-year-old woman in the UK sitting at 87, some female retirees could be left with a 14-year shortfall between their private pension funds running out and the end of their lives.

By comparison, men could see their pots run dry by the age of 83, the research indicated.

With the average life expectancy of a 60-year-old man in the UK at 85, men could have two years of retirement without any leftover private pension savings.

Katharine Photiou, managing director of workplace savings at L&G, said that, after decades of saving, the ability to withdraw money from a pension can create a “lottery effect”.

But she cautioned: “What seems like financial freedom now might turn into uncertainty later.”

The modelling used Office for National Statistics (ONS) life expectancy calculations as well as an Opinium survey among 3,000 people aged over 50 carried out in December 2024.

The calculations made various assumptions about inflation and investment returns and that people would start making regular withdrawals when they turned 67 until their private pension pot ran out. It was also assumed that people had no other sources of income, such as property wealth or a guaranteed pension income based on someone’s salary.

People will also be entitled to the state pension, the size of which depends on factors such as national insurance (NI) contributions.

The research indicated that women are typically withdrawing less from their pension than men but have less money saved into it to start with, at £40,000 versus £87,500 for men.

Of those receiving income from an income drawdown pension, women are receiving £625 per month on average, compared with £875 for men.

However, women were more likely than men to have increased their withdrawal rate since they first started making withdrawals.

More than a quarter (27%) of women making withdrawals had increased their withdrawal rate, compared with less than a fifth (19%) of men.

The research was released as a survey of 2,000 people for savings and investment app Moneybox, which found that nearly one in 10 (9%) women plan to start investing this year, while 13% intend to increase their investments.

Investing more was found to be the top financial goal among women aged 25 to 34 years old, the survey by OnePoll found.

More than half (59%) of women who invested last year did so to grow wealth, 47% wanted to secure a comfortable retirement, and 34% were aiming to provide for family in future. Nearly a fifth (18%) of women who invested did so because they enjoyed it and treated it like a hobby.

London and Northern Ireland had the highest rates of female first-time investors last year, the Moneybox research indicated.

Lower, part-time salaries and caring responsibilities can be obstacles to some women – and some men – being able to save adequately for later life.

Catherine Foot, director of Phoenix Insights, said that while pay is a “major reason” behind the gender pensions gap, the disparity is “made worse by life events that women can face – such as motherhood, divorce, caring responsibilities, and menopause – which disproportionately affect their ability to save”.