Rising interest rates and a cost-of-living crisis have added to the pressures on our lives. But women have been disproportionately affected, because on average they tend to earn less and because they don’t have the same financial cushion in place as men.

That financial cushion, the gender investment gap, is something we’ve been thinking hard about for a couple of years.

AJ Bell’s Money Matters campaign was launched in 2021 with an eye-opening bit of research which revealed that on average British women have less than half of the savings and investments (not including property) of men and cumulatively that amounts to a £1.65 trillion gap.

The latest gender pay-gap figure came in at 9.4% so it raised the question – what happens during a woman’s life that ultimately makes them poorer and what can be done about it?

We didn’t just want to conduct a bit of research; we wanted to identify and interrogate the reasons for the gap and create a toolkit to help make women more financially resilient.

ISSUES TO CONSIDER

There’s always a bit of controversy when we talk about financial gender inequality but helping more than half of the population avoid these potholes can only help create a richer society which will in turn help everyone.

While it might seem counter-intuitive to work backwards, there’s been so much focus on getting over-50s back into the workplace that discovering that half of all women over 50 surveyed said their career and finances had been impacted by caring responsibilities in later life felt like the right place to start.

I’ve just hit my own half century and to be honest it’s now that I’m really starting to think about what my retirement will look like and how much longer I will need to work to make my dreams a reality.

What if I had to cut my hours, change job to one that paid significantly less or quit work entirely? I would need to establish what that would do to my pension and my plans.

At the moment I don’t have grandchildren to look after, and my mum is still wonderfully healthy, but this is the time many women are having to make tough choices about how they spend their time.

HOW WOMEN HAVE BEEN IMPACTED

Fifteen percent told us they had quit work because of caring responsibilities; 18% had cut back on their hours and 7% had taken a lower paid job in order to be able to juggle all those balls.

Think of all that experience, all that labour that could be boosting productivity but instead is leaking out of the labour market.

Men are impacted too, but to a lesser degree, which is why there is also a difference in the reasons men and women gave for returning to the workplace after retirement, with women more likely to say they had returned to work because they needed the money and men because they needed a new challenge or sense of purpose.

It’s no coincidence all political parties have been focusing on the thorny issue of childcare costs as we head towards the next general election.

Although more men are taking up the option of paternity leave and sharing in childcare responsibilities it still has a disproportionately large impact on a woman’s working life with many mothers taking career breaks or quitting work entirely, especially those with more than one child to look after.

Women’s pension pots take a big hit during this period with only a quarter of women maintaining contributions at the same level and the same number cutting contributions entirely while taking parental leave.

The financial implication of being a parent is even prompting some women to delay having children or to make the decision not to have them at all.

With an already ageing population, that trend could have massive implications for the future.

REASONS TO BE OPTIMISTIC

Resources like AJ Bell’s Money Matters project are providing financial toolkits and younger women in particular are prepared to have tricky conversations about their financial lives.

Sixty percent of those aged 25 to 34 said they had discussed finances with their partners before they had children compared to just a quarter of 55 to 64-year-olds. That younger generation is now more likely to split childcare costs and parental leave.

But women are still less likely to ask for a pay rise than their male colleagues and more likely to prioritise softer benefits like hybrid working or extra holiday entitlement over share schemes and higher pension contributions.

I’ve seen a lot of commentary railing about the ‘pinkification’ of women’s financial resources and there will be plenty of people who will look at AJ Bell’s survey and find fault.

But the differences between an average woman’s finances and an average man’s finances are clear and this research report only serves to highlight what we already know.

Women have ‘Financial Wobbly Bits’ – points in our lives where our fortunes – literally – diverge from men’s.

Addressing that situation shouldn’t be considered rude, sexist or wrong. It should be seen as an opportunity for discussion and for change.

DISCLAIMER: AJ Bell publishes Shares magazine. The author (Danni Hewson, AJ Bell’s head of financial analysis) and article editor (Daniel Coatsworth) own shares in AJ Bell.

Follow this link to read the AJ Bell Money Matters ‘Financial Wobbly Bits’ report and access a mini guide to financial fitness.

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