Tips for women on closing the pension gap
Research shows women run a higher risk of developing a pension gap. Anna van Vliet, communication and activation specialist at Aegon, reflects on International Women's Day how to invest more for retirement.
Anna's tips relate primary to working in the Netherlands, but the principles apply to women everywhere.
1 Use a salary increase to make extra contributions
Are you getting a well-deserved raise? For example, through a promotion or a collective labor agreement? If so, you can use that salary increase to make extra contributions to your pension pot. This is fiscally advantageous in the Netherlands because the amount is deducted from your gross salary. Small amounts can yield a lot in the long run. Good to know: there is a maximum to the extra contributions you can make so check with your pension administrator. Also, extra deposits are only possible with a defined contribution scheme.
Are you building up a pension through an average or final salary scheme? It is worthwhile to consider extra savings via, for example, bank savings or an annuity. You may also be able to use your salary increase here.
#2 Consciously decide on your investment profile of your pension scheme
Another way in which you can influence your pension is by adjusting your investment profile. An investment profile indicates the ratio between return and risk. Each pension administrator determines a classification of profiles. For example:
- Defensive investment profile: low risk, you are cautious
- Neutral: average risk, you dare to take a limited gamble
- Offensive: high risk, you strive for the highest possible return
Fun fact! Women invest more cautiously and are more likely to look to the longer term than men. As a result, women often achieve a higher return.
#3 Divide your bank account into savings goals
People often find it difficult to save for retirement. You forget it, it doesn't work out or you prefer or need to spend your money on other things. Nevertheless, saving for retirement is always a good idea. A trick: divide your bank account into savings goals. When you have a concrete goal in mind, it is easier to set aside money. Nowadays, at many banks you can divide your account into different pots and link savings goals to them. This way you can see exactly how much you already saved for that beautiful holiday and your pension. Make it extra visual and add fun images to your goals.
#4 Save with your flex budget
Many organizations provide employee with an additional flex budget as part of your compensation. Usually this includes your holiday pay and thirteenth month, and it is often paid out monthly. You can also choose to reserve it every month. That can make a big difference that may pass almost unnoticed. EUR 100 less salary into your hand per month can translate at the end of the year about EUR 600 net paid.
#5 Think about your hours in your contract
The more hours you work, the more pension you can accrue. That is why it makes sense to really think about on the hours in your contact. Maybe you have a 38-hour contract, but you work 40 hours a week and accrue 2 hours of vacation every week? Could you opt for a 40-hour contract instead? This would mean more salary and you build up more pension. You will however have fewer holiday hours. Good to think about and choose what suits your situation best.
#6 Enter FinSnap (specifically for the Netherlands)
Are you wondering if you will have enough money later on to get the best out of life? Then it is important to think ahead. This can be done very easily in the Netherlands with FinSnap. This online tool gives detailed insight into your finances in 10 minutes. Perhaps you want to retire earlier or work less. FinSnap helps you discover the possibilities. A professional advisor can then help you act.