The menopause, your pension and you

Whether you’re early, peri, during or post menopause, recent research shows that it’s not just the physical and mental effects of the menopause that we women have to deal with. The menopause has the potential to hit us in the pocket too.

On a personal level, I consider myself lucky. Beyond the fact that I only need look at chocolate to pile on the pounds, and I occasionally get a little bit of brain fog (which is bizarrely verbal, I never struggle to get words down on a page - thank goodness), touch wood I’m relatively free of menopausal symptoms.

Equally, on a professional level, I feel supported and able to talk about the menopause at work. But I know from talking to friends and family that this isn’t the case for everyone.

Close to a million women’s pensions are worse off in the UK due to the menopause¹

In fact, according to the report ‘Bridging the Gender Pension Gap’ from mutual life and pensions company, Royal London¹, women are more likely than men to reduce their hours - or exit work altogether - in their 50s, which is the prime age bracket for pension saving.

To understand the impact this could have on a woman’s pension pot, Royal London calculated the potential impact the menopause could have on a 50-year-old woman in full-time work with a salary of £40,000 and a pension fund of £100,000. If she works full time until State Pension age, she could be around £126,000 better off compared to another woman who stops working at age 50, who instead of having a pension pot of £355,510 would have a pension pot of £229,202.

If a woman had to reduce their hours by 50% at age 50 due to their menopause symptoms, this would reduce their pension pot by £63,000, so they’d have £292,356 at State Pension age. Both of the above calculations were calculated using wage increases of 2.5% each year, a growth rate of 5% (not including charges) and total pension contributions of 10%, split between the employee and her employer¹. 

This kind of reduction in retirement savings could have a very real impact on how comfortably a woman could retire.

It goes to show that being able to save during this stage of life can be critical to achieving healthier savings  - as it’s also a time when many women are at the peak of their careers.

Hope for the best, prepare for the worst

Of course, there are no givens when it comes to the menopause. You may be completely unaffected. Or you may not. But where’s the harm in preparing for the worst, and hoping for the best? This way, no matter what the future holds, you’ll at least be able to face it with more confidence - from a financial perspective at least.

Little changes can make a big difference

Consider putting away an extra 1% into your pension. It really can make a big difference over time although this is not guaranteed as the value of investments can go down as well as up.

And make sure you max out on any company pension contributions that are on offer - after a while you probably won’t even notice the money coming out, as it’s taken at source.

If you get a pay rise or bonus, you may also want to think about adding this to your pension pot - even contributing some of it can help in the long run.

And think about combining your pensions if you’ve collected a few in your working career. Bringing them together could make them easier to manage. It’s important to understand that pension transfers are a complex area and may not be suitable for everyone. Learn more about transferring your pension here.

Taking control of your finances really can help you feel better about the future. And small sacrifices now will almost certainly benefit your future self.