As women are expected to live longer, it proves harder for them to maintain their lifestyle in retirement, having to stretch their wealth over a longer period, reported UBS.
On average, in the US, women’s life expectancy is 6.7 years longer than men’s, whereas in the UK, the difference is 5.3 years. As a result, the study revealed that an illustrative pay gap of 10% would result in a woman having 38% less wealth than a man at age 85.
Meanwhile, the research discovered that pay discontinuity, longevity, investment decisions and behaviours were also all seen to widen the gender gap.
Income disparity, career breaks and work flexibility were predicted to negatively impact long term wealth and harm career prospects. In an example scenario, the UBS survey stated that women who take a short career break are likely to end up with 43% less wealth than men at age 85.
However, according to the report, recent surveys have highlighted that women appear to lack financial confidence and are more reluctant to take financial risks than men.
Despite spending more time researching, the report found that the lack of confidence can impact women’s appetite for risk and lead to them choosing what they believe to be low-risk investments.
In the reports, UBS said: “Of the many differences between women and men, how they build and invest their wealth over time is one of the most important.
“Many women’s life events and situations currently introduce barriers to creating wealth. Apart from pay differences between the genders, taking career breaks and needing to work flexibly can also have a detrimental impact upon their wealth.
“Good financial advice can help women overcome some of their wealth challenges, reinforce their financial confidence, and better understand risk. Women can grow their wealth and achieve their goals by understanding their situation, and feelings about investing in particular. This can go a long way in helping to narrow the “gender gap.””
The study is part of UBS Unique, which is a five-year plan to better serve female clients and increase the financial confidence of one million women by 2021.
