Savings gap even bigger than the pay gap (22/06/07)

Women’s savings are worth 33% less than men’s, according to new research from the Fawcett Society. This gender savings gap is even bigger than the much better documented 17% gender pay gap.

Fawcett’s research uncovered a worrying picture: women’s saving is much more likely to be disrupted than men’s by life events such as childbirth or divorce.

Dr Katherine Rake, Director of the Fawcett Society, said: “Our research has uncovered a worrying black hole in women’s savings, particularly for mothers and divorced women.

“Women and their families are being left vulnerable through lack of savings – and this adds to the ever more compelling argument that urgent action is needed to end the pay gap once and for all.”

Key findings

• Young women save at relatively equal levels to young men.
• Divorce is particularly catastrophic for women’s savings. Our research showed the now widespread idea that women now have the advantage in divorce to be a myth. In fact, men’s saving levels recover after divorce, women’s don’t.
• Mothers are less likely to be saving for themselves than fathers, particularly in the early years of a child’s life

Causes of the gender savings gap

It is not that women are less inclined to save than men, but

• Women’s income is smaller than men’s; they save smaller amounts
• Women are more likely put family spending or saving first, men more likely to prioritise personal spending and saving
• There is evidence that some women are relying on partners to save for the future
• Women are much less likely to be able to recover financially from divorce as they are more likely to have given up or scaled back their career during marriage and have even greater caring responsibilities after divorce.

Impact of the savings gap

A women with little savings

• is unprotected when unexpected expenses arise and may have to resort to expensive credit;
• lacks choices, such as whether to leave an abusive relationship
• lacks protection from the anxiety that financial difficulty can cause

What women should do

• Make a Plan B. Relying on a partner to make savings for the future is a high risk strategy, especially if you are not married. For many women saving at all will be impossible. But if you can, save something in your own name.
• If you have a partner, discuss with them what they are saving for themselves and for joint/family needs. Honesty about savings and priorities will help you both plan for all eventualities.

Please note that Fawcett does not currently provide information on personal finance to individuals. For a list of organisations that do, click on 'Women and personal finance links' on the right hand side of this page.

What Government should do

• Provide extra support and encouragement to women to save at key points
• Ensure that those on a low income are able to access free legal advice and representation around divorce and do more to protect cohabiting women on relationship break-up.
• Ensure that women have access to appropriate financial information
• Tackle the income inequality that is a major cause of the gender savings gap