Women face a unique retirement reality. They tend to live longer, are more likely to experience career interruptions, and often retire with less accumulated wealth than men. These realities mean retirement planning requires more than simply building the largest possible nest egg.
It requires a thoughtful strategy for turning those savings into a reliable income that can provide financial security throughout a retirement that may span 30 years or more. The goal is not simply to retire, but to retire with confidence, knowing your money is positioned to support the life you want to live.
The shift from saving to sustaining
The financial strategies required while working are almost completely inverted in retirement. During your career, market volatility can be a long-term growth ally. In retirement, however, when you transition from wealth accumulation to income generation, that same volatility can pose a significant risk to the sustainability of your income.
As Momentum’s She Owns Her Success festival returns for its eighth season, new insights from its Women and Financial Advice research show that women are already highly engaged in managing their households’ finances and prioritise financial protection and long-term resilience.
Yet retirement planning often focuses on building wealth, with far less attention given to managing it once a regular income from employment stops. This is particularly important for women, who typically live longer and may need their retirement savings to last for three decades or more. Drawing down on investments too quickly during a market downturn or a period of high inflation can lock in losses, permanently erode capital and reduce the income available later in retirement.
Navigating longevity and the savings gap
The most underestimated dynamic in modern retirement planning is longevity risk. People are living longer, which means capital must stretch across a much longer timeline. This challenge is magnified by modern, non-linear career paths and changing employment patterns. This is particularly true for women, who are statistically more likely to experience career gaps for caregiving duties and have a longer life expectancy than men.
On average, a 60-year-old woman lives 3,5 years longer than a 60-year-old man. To secure the same retirement income increasing at 5% a year, a woman requires roughly 10% more capital than a man. Yet, in practice, women retire with about 32% less savings on average. While it is encouraging that this savings gap has reduced from about 57% just five years ago, it highlights why a tailored income strategy is absolutely vital for women.
Structuring certainty and flexibility
To prevent capital from running out, retirees must carefully balance flexibility with certainty by choosing the right combination of solutions tailored to their personal needs and risk appetite. A life annuity and a living annuity play different roles. A life annuity offers guaranteed income for life, ensuring a fixed, predictable income stream, effectively removing market and longevity risks.
This income can remain fixed, increase at a set rate, or link to inflation, ensuring you cannot outlive your money regardless of market downturns. A living annuity, on the other hand, means that your money remains invested, giving you the flexibility to adjust your yearly drawdown within legal limits to respond to changing needs and market conditions.
However, drawing too much or selecting the wrong investment approach places your financial sustainability at risk, as your money could run out. A living annuity works well for those who can manage that responsibility with the help of a financial adviser.
Because there is no one-size-fits-all solution, a blended approach can make a lot of sense. Retirees can use a life annuity to cover essential monthly expenses, while keeping remaining assets in a living annuity to provide flexibility, growth potential, and a legacy for children.
The value of expert guidance
An income strategy should not remain static and requires regular reviews as health, marital status, and spending needs change. The Momentum-BMR survey reveals that households working with a professional adviser see their average household wealth significantly exceed that of those not using a professional adviser. Even among households with formal employee benefits, partnering with a certified adviser extends financial outperformance.
Despite the data showing that households who use a professional adviser have better financial outcomes than those that don’t, Momentum’s data indicates that only 9,2% use certified financial advisers while the majority (76,5%) rely entirely on their own knowledge, skills, or experience.
Retirement planning is deeply personal and complex. Don’t rush these decisions. By partnering with an accredited financial adviser, you can carefully explore your options to design a strategy that balances today’s lifestyle desires with tomorrow’s financial survival, turning an uncertain chapter into one of confidence, clarity, and peace of mind. Ultimately, income certainty is not a luxury; it’s a necessity.
Article by: Fareeya Adam, CEO: Structured Products and Annuities at Momentum Wealth
