New analysis of figures from the Department for Work and Pensions (DWP) has revealed that millions could face running out of money less than a decade into retirement, with women being particularly vulnerable. The data highlighted a stark 48% gap between men and women’s retirement savings. On average, by the age of 55-59, women have accumulated around £81,000 in their pension savings, while men have approximately £156,000.

However, neither group is saving sufficiently for an extended retirement. Interactive Investor experts underscored the gravity of this issue as women could risk running out of money in retirement as early as 74.

Using an example of a woman woman retiring at 67 with a £81,000 pot and eligible to claim the full new state pension. The experts noted if she wants an annual income of £23,000, including £11,900 of state pension, her funds will be depleted by the age of 74.

Similarly, a man retiring at 67 with the full state pension and £156,000 in savings could risk exhausting his funds by the age of 84. This scenario assumes they withdraw £11,000 income from their pension each year, achieve 5% annual investment growth and that pension withdrawals increase 2% annually, in line with inflation.

Even with a pension income of £23,000 per annum, these people won’t enjoy a luxurious retirement whilst they still have savings. According to the latest Retirement Living Standards report, they’ll fall short of even moderate lifestyle standards, which costs around £31,700 per person in retirement.

For a comfortable retirement, people need £43,900 annually. Camilla Esmund, Senior Manager at interactive investor, weighed in on the matter: “We’ve long been vocal on the need for the gender pension gap to be given the urgent attention it demands, as well as the importance of greater pension engagement in the UK more broadly.

“interactive investor’s calculations are for illustrative purposes but are indicative of the scale of the challenge for women approaching retirement. The gender pension gap means that thousands of women risk having little to supplement the state pension.

“Despite having lower pension values, women live for longer on average in retirement, and are often left struggling financially in old age once their pension wealth has dwindled.” The specialist highlighted that women encounter “systemic hurdles” in saving for retirement, often due to part-time work or career breaks for caregiving, leading to a cascade of reduced lifetime earnings and pension contributions.

Following the government’s announcement last week to reform the Pensions Commission, an expert has expressed hope that the issue will be “explicitly referenced”. The previous Pensions Commission laid the groundwork for auto-enrolment, and there is anticipation that the upcoming meeting will advance the scheme to assist younger women facing financial challenges.

She emphasised: “There are a lot of factors at play here, but this also comes back to the sheer importance of greater pension engagement in the UK. We need to help empower women to take control of their pension wealth at an earlier stage, but also to remind them it’s not too late to make a difference if you’ve spent time out of the workforce.”