5 Retirement Planning Mistakes Women Make (And How to Avoid Them)

Retirement planning is essential for everyone, but women face unique challenges that can make it more difficult to save enough for a comfortable retirement. On average, women live longer than men, meaning they need more savings to cover additional years of expenses. However, career interruptions due to children, caring for elderly parents, or taking career breaks often reduce lifetime earnings and pension savings.

The gender pay gap and the gender pension gap further impact how much women can set aside for retirement. Women often earn less money than their male counterparts, resulting in smaller pension contributions and lower retirement income. Many women also take fewer investment risks, keeping money in savings accounts instead of higher-growth investments.

Avoiding these common retirement planning mistakes can help women take control of their financial future and ensure they are financially prepared for later life.

Mistake #1: Not Saving Early Enough

One of the biggest retirement planning mistakes is delaying pension contributions. Many women prioritise current expenses—such as housing, children’s education, and daily living costs—over long-term retirement savings. The result? Less time for investments to grow, which makes it harder to build enough savings for a comfortable retirement.

Starting early allows savings to benefit from compound growth, where your returns generate additional returns over time. Even small contributions to a workplace pension or personal pension in your 20s or 30s can make a huge difference by the time you retire. If you haven’t started yet, the next best time is now. Increasing contributions, even slightly, can help close the gap.

How to Avoid This Mistake

• Enrol in a workplace pension as early as possible and take advantage of employer contributions.
• If you’re self-employed, set up a personal pension to ensure you’re still saving.
• Increase contributions whenever you get a pay rise to make saving easier.

Mistake #2: Relying Only on Workplace Pensions

While a workplace pension is an excellent way to save, it may not be enough to maintain your lifestyle in retirement. Many women contribute only the minimum amount required, which might not provide sufficient retirement income. Additionally, career breaks and part-time work reduce overall pension contributions, further widening the gender pension gap.

Depending solely on one source of income can leave women financially vulnerable, especially if they retire earlier than expected due to health issues or family responsibilities. Having multiple sources of retirement savings is key to long-term financial security.

How to Avoid This Mistake

• Consider opening a private pension or investing in stocks and funds for additional growth.
• Take full advantage of any tax relief on pension contributions to make your money go further.
• If possible, continue making contributions even during career interruptions to keep savings on track.

Mistake #3: Avoiding Investments Due to Fear of Risk

Many women avoid investing because they are concerned about investment risk, preferring to keep money in savings accounts instead. While savings accounts provide security, they rarely offer enough growth to keep up with inflation, which means money loses value over time.

Women tend to be more risk-averse than men, which can result in lower overall returns. While it’s important to manage risk, avoiding investments entirely can mean missing out on significant growth opportunities. A well-diversified portfolio can provide both security and steady long-term growth.

How to Avoid This Mistake

• Balance security with growth by investing in pension funds, exchange-traded funds (ETFs), and other low-cost investment options.
• Consult investment advice to understand different strategies that align with your risk tolerance.
• Use tax-efficient accounts like Stocks & Shares ISAs to maximise returns while minimising tax implications.

Mistake #4: Taking Career Breaks Without Planning for the Impact

Many women take time off work to raise children or care for elderly parents. While these decisions are often necessary, career interruptions can have long-term financial consequences, including reduced pension savings and lower retirement income.

Women who take career breaks often miss out on employer contributions to their workplace pension, making it harder to catch up later. Additionally, working part-time or earning less during these periods means contributing less money to savings.

How to Avoid This Mistake

• If you take a career break, try to continue making voluntary pension contributions to avoid falling behind.
• If married or in a long-term relationship, consider discussing pension planning with your partner to ensure both of you are saving equally.
• Plan ahead by increasing contributions before a planned career break to compensate for lost savings time.

Mistake #5: Underestimating How Long Retirement Will Last

Many women don’t realise how much they need to save because they underestimate their life expectancy. On average, women live longer than men, meaning their retirement savings need to last longer. This can lead to financial shortfalls in later years, especially if health care costs increase.

If pension savings run out too soon, women may need to rely on state pensions, which are often less money than expected. The risk of outliving savings is one of the biggest financial challenges women face.

How to Avoid This Mistake

• Consider your average life expectancy when planning how much to save.
• Use pension calculators to estimate how long savings will last based on your expected retirement age.
• Factor in healthcare and long-term care costs when setting retirement goals.

Women face unique challenges when it comes to retirement planning, but being proactive can make a significant difference. Starting early, maximising pension contributions, and diversifying investments can help build long-term financial security.

For those who have taken career breaks, increasing savings later and considering additional investment options can help close the gap. Understanding the impact of life expectancy and ensuring savings last is also essential for a comfortable retirement.

Taking control of retirement planning for women means making informed financial decisions today to benefit your future self. The sooner you start, the better prepared you’ll be to enjoy a financially secure and fulfilling retirement.