In the Netherlands, women on average build up 40% less pension than men, and that while we live 6 years longer on average. These figures are well-known, but however you look at it, this is a bad thing and makes women more likely to be in financial trouble after age 67. To know how we can help women close this retirement gap, we at Elfin conducted research among 6,000 women. This is how women feel toward retirement:
Read more about the pension gap women face (and what we can do!) here!
How much money do you actually need?
76% of women do not know how much money they will need later to make a good living. By the way, the maxim about how much pension you need in order not to have a huge income drop after age 67 is not complicated: 70% of your average gross earned salary is the starting point. Depending on your lifestyle and desires, this may be more.
How do women build pensions?
80% currently do accrue pension, of which 34.2% do it through their employer, 20.5% do it themselves and 25.3% do both: both through employer and accrue additional pension themselves.
Women who accumulate their own pensions or supplementary pensions do so in a variety of ways, but mostly by investing. From real estate investing and retirement investing to investing in stocks and gold.
The most frequently cited reason (29.2%) why women do not accumulate pensions is because they do not know how to do so. Want to know how you do build up a pension? Start by reading this article.
How much pension do women accrue?
41% say they do not currently know how much pension they are accruing, 41% say they know the current accrual is not enough to live on later, and only 17% of women know how much they are currently accruing.
Do you know the tax benefits?
There can be interesting tax advantages to building up a pension. Yet 66.9% of women are not aware of the tax benefits they can get if they build up (extra) pension. What are the benefits?
When you start investing for retirement, the government helps you by making it tax-deferred. Much of the money you deposit into your retirement account will be returned to you by the Internal Revenue Service. It works pretty much the same as with mortgage rates. On the retirement income later, you pay (hopefully a substantially lower) income tax.
Suppose you earn €36,000 gross per year. Then you pay 36.93% tax on your income. Your employer helps you build your pension, and together you contribute €200 a month.
However, your annual margin shows that you may add another €1850 to your pension pot this year. And because the IRS wants to reward you, you get tax back on that €1850.
How much? That 36.93%! That means you deposit €1850 in your retirement account now for later, and get €683 back for it on the upcoming income tax return round. You may offset that during your income tax return.
Please note that this example is illustrative. What your tax return looks like has to do with more aspects than just your pillar 3 pension contributions.
