It’s amazing what happens when you meet the right person. All of a sudden lifestyle and family choices that seemed totally daft become a possibility.

So like lots of women, but certainly not according to the plans of my younger self, I had children, and having had the children when the work became less fun and the kids became more (basically toddler+ for me but everyone has their own ideas) I stopped working and stayed home to look after the kids. Well, look after the kids, play lots of tennis, have a good time and manage an investment portfolio.

It wasn’t quite the stereotype I had in mind as a kid, but close enough for strangers making deliveries to feel entitled to query my title and expect me to wait in on them.

Ho hum.

In the UK we have a system whereby you pay tax known as national insurance which entitles you to amongst other things, a state pension.

The UK state pension is amongst the most miserly in Europe, at just £6,200 per annum, but it’s index-linked and to buy a comparable annuity would cost me something more than £250,000. An asset worth quarter of a million pounds is worth having.

Whilst working, I was obviously contributing. Whilst looking after the kids, I acquired credits towards my state pension up until the youngest became sixteen and then, not unreasonably, they assumed I could go back out to work and start paying again.

Around the same time, 2016,  they also changed the number of years a person has to work from 30 to 35 in order to accrue the full state pension.

Long story. Short conclusion: I have a shortfall, a gap in my contribution schedule that can be made by making a voluntary contribution.

Each year that I failed to pay is priced slightly differently for no obvious reason but most seem to end up costing around £700. For that £700 I will be entitled to an extra £4 a week, index linked on my pension i.e. an extra £208 a year. To be worthwhile, I would need to survive 4 years post pension age, which in the UK , has also been moving ever further away.

All of this was determined after many phone calls to HMRC and to the pensions help line department. In order to determine my shortfall I had to ask for and receive an NIC statement. Before allowing me to pay any shortfall, HMRC insisted that I ask for and receive a state pension statement which predicts what my pension would be with a full contribution record, and with what I’ve already paid in. Interestingly they’re predicting the state pension will be worth around £8,500 when I retire, assuming they don’t push back the date even further.

At some stage in the telephone tree there’s a really annoying attempt to move you onto voice recognition software for security, without offering you a choice, just an assumption. If you want to refuse the option, your only choice is to stay silent when asked to repeat the stock phrase.

Ho hum.

For a woman of my generation, I can claim state pension from the age of 67. Average life expectancy in the UK for women is around 83 years old though there are huge local variations. As a white, middle class woman with no obvious health problems and no really bad habits (smoking, drinking regularly to excess etc) I could quite plausibly last to 90, but let’s assume the average age.

I will have a shortfall in my contributions for 12 years, which will cost me around £8,400 to make up, and gain me an extra £2,496 each and every year I survive past 67. If I make it to 70 then I’m making a profit. If I reach the average life expectancy, I’ve gained £14,976 at a cost of £8,400.

But of course most women aren’t in anything like as good a financial position. Most will have neither the cash set aside in their own name to pay this, nor the skills to go back into employment to a job that pays them a good salary. They may not have a clue as to how their state pension is calculated, how much they will be entitled to and whether it’s a good investment. They may be relying on their partner to provide for them in their old age, unaware of the rise in late life divorce, the impact of bereavement etc.

The UK state pension is arguably a pitiful amount, yet as a couple, it starts you off with a combined income of £ 12,400. Assuming that you’ve paid off your mortgage, it means you are unlikely to starve. You should be able to heat the house. Add into the mix a defined benefit pension from your employer, and maybe a defined contribution pensioner two from your partner to top up, and it should (fingers crossed) provide a good standard of living.

There are apparently three stages of retirement: Saga, named for the retiree travel company, when you basically live the dream of active retirement, travelling and having all of those adventures that you’ve promised yourself; AGA where you start to feel your age, still in good health but living life closer to home and less adventurous;and, gaga, when dementia sets in for at least one third of us, and your savings are used up paying for care in an often inadequate care home.

Back to that investment management…