How to protect your finances from the menopause

It's well established that it can be difficult for a woman to build the same level of savings, investments and pensions as a man. Women tend to be in lower-paid jobs and take career breaks or work part-time to take on caring responsibilities, which has a lifelong impact on their finances.

A less discussed issue is how menopause affects women’s financial lives. Symptoms vary, but for some, they can be debilitating. They include brain fog, anxiety, difficulty sleeping, palpitations and many others, with a potential impact on women’s daily lives and work that is hard to overstate.

Research from AJ Bell’s Money Matters campaign, based on a survey of 4,000 UK adults carried out in June 2023, suggests that roughly one in 25 women reduce their working hours due to menopause, and one in 20 stop working altogether. Helena Morrissey, founding ambassador of AJ Bell Money Matters and former AJ Bell chair, says she has recently gone through menopause and was not surprised by the findings. “The physical, mental and psychological symptoms, a daunting 34 possibilities, are now thankfully more widely talked about. But those symptoms can in turn have a significant adverse impact on our career and finances, something that’s much less discussed or understood," she says.

Impact on retirement

Menopause typically affects women between the ages of 45 and 55, well in advance of the current state pension age of 66. Royal London estimates that a woman on a £40,000 salary who stops working at the age of 50 could lose out on £126,000 of pension savings compared with someone who kept working full-time until state pension age.

This is a fairly conservative estimate. It assumes that if you go part-time or stop working, you do so without drawing from your pension pot. It also assumes that if you do keep working instead, you don't increase how much you save into a pension leading up to retiring. 

But Clare Moffat, pensions expert at Royal London, points out that menopause hits right around the age when women normally start focusing more on their pensions – because their pay may have risen as their career progresses, they might have paid off their mortgage and no longer have young children to worry about. Many women who continue working in their 50s and 60s increase their pension contributions, meaning the pension gap between this group and a woman who stops working or goes part-time could be even wider.

What can you do?

The first port of call, if you are dealing with a difficult menopause, is checking what support your employer offers. As part of wider gender and wealth gap research, in 2023 Royal London surveyed 126 women who suffered from menopausal symptoms. Some 49 per cent said they were considering leaving work because of it, but 82 per cent said they would be more likely to stay with their current employer if they were better supported. It can be the case that women use their annual leave or unpaid leave to take time off work to cope with symptoms. 

Workplace support isn’t always great, but Moffat notes that things are gradually improving. Some employers have dedicated menopause support groups and policies, while others offer broader employee assistance programmes – a benefit that provides employees with online counselling and expert support on a range of personal and work issues. Making full use of the available support might improve the situation enough that you can manage your symptoms while staying in full-time work.

If you do end up going part-time or stopping working, consider the impact on your retirement savings and how you can minimise it. Because workplace pension contributions are based on a percentage of your salary, if you go part-time and can afford it, increasing that percentage can partially make up for your lower pay. If you have a partner, they could make pension contributions on your behalf – but note that if you have no earnings, you will only get tax relief on the first £3,600 of contributions each tax year.

Do not assume that going part-time or stopping working is permanent: symptoms might improve enough after some time to allow you to get back to work. At that point, you could up your pension contributions to make up for any shortfall. But making at least some contributions during a career break is better than trying to make up for them later, as it enables you to make the most of compounding and investment growth.

You should also check your national insurance (NI) record and see whether it might make sense for you to make voluntary contributions to fill any gaps and ensure that you get the full state pension when the time comes. Depending on your retirement plans and how long you have worked this might be unnecessary – to receive the full state pension you need 35 qualifying years of NI contributions.

Save when you can

As is often the case, thinking about the subject in advance can be beneficial. Nicola Crosbie, director of Moran Wealth Management, says: “I say this to quite a lot of high earners in their 40s: there's a lot of sense in saving while you can so that if there's ever a day when your circumstances change, you can start to dip into those savings. It's quite easy to spend your surplus income, but if you have a savings plan in place, then you have more choices when issues such as menopause start to come in.”

She also notes that it might be helpful to save ahead not just in your pension, but in your individual savings account (Isa) too if you can. While pensions offer great tax relief, they are less helpful if you need to dip into your savings simply because you can’t access the money until the age of 55 (or 57 as of later this decade).

You can also look into income protection insurance, which pays you a regular income if you can't work because of sickness or disability. Crosbie says that menopause symptoms can develop into chronic conditions that make you unfit to work, such as anxiety, depression or even heart conditions. Having income protection would shield you from the financial consequences, but you do need to take it out when you are still healthy, and it can be expensive.