Traditionally, when it comes to childcare, Fidelity’s research1 shows that it is generally women who adjust their working life after starting a family. Women are more likely to take a career break to start a family and shared parental leave remains under-used.
With more of us working from home many families and parents might be taking another look at how they work and share childcare responsibilities. Many may want to find a different way and be considering using flexible working options to share the care.
Reconsidering the financial cost
For many, the monthly cost of childcare is bigger than their grocery bill and transport costs and second only to their housing costs. For some families the cost of childcare even eclipses the monthly mortgage payment.
While reviewing current working and childcare arrangements, parents may look at options to reduce those hefty bills. One way might be to adopt a more shared approach and rely less on providers like childminders, nannies and nurseries.
Minding the (pensions) gap
There are long-term costs of childcare too. Often, it’s Mum giving up her career or choosing to reduce her working hours. This impacts earnings and affects how much is being saved each month in workplace pension contributions.
In this situation, the long-term costs carry into retirement. Figures from the Pensions Policy Institute (PPI) show there are 50% more women than men heading towards retirement without any private pension savings. Those women who do have private pension savings in retirement, only have one third that of what men have saved. To put this into numbers: by retirement, women would have accrued approximately £51,000 in pension savings, in comparison men would have saved around £157,000, creating a pensions gap.
Adapting for the future
The recent move to working from home has demonstrated to parents that it may be possible to adopt a more flexible approach. For some families, this greater flexibility in the way we work may raise the possibility for childcare to be shared.
When that happens, childcare can be more evenly split - an opportunity that may have been missed without flexibility in working patterns. And women can start to build their earning potential and increase their pension contributions to close the gap, something that may have been missed due to taking the role of primary care giver.
Get to know your pension by logging in to PlanViewer, see how much you’ve saved, how much you’re contributing, understand your investments, and check your target retirement age is up to date. You’re not legally obliged to retire then, but it means if you’re invested in a default lifestyle investment strategy, it will work to protect your money in line with your goals and life stage.
Remember, you can’t normally access your pension until you’re 55. Until then it’s a good idea to regularly review your savings.
1Fidelity International surveyed 2,000 UK adults, with an equal gender split, on their views around money and their finances. All respondents had over £1k worth of investible assets. Research was carried out by Opinium Research in February 2020.
The value of investments and the income from them can go down as well as up, so you may not get back what you invest. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment or action. You should regularly review your investment objectives and choices and if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser.