How women can overcome obstacles to retirement

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Retirement planning requires forethought, discipline, and the juggling of many moving parts. Staying on track to meet financial goals can be tricky for anyone, but it can be especially hard for women, who face a number of financial headwinds.

Women face unique challenges when it comes to employment, income, and caregiving; as a result, they often must take a different approach when it comes to preparing for a financially secure future. Here’s a look at some of the retirement hurdles women face and how to address them.

The challenges facing women in retirement

Women still earn less in the workplace than their male counterparts — 89 cents on the dollar for white women and even less for women of color. So, it may be no surprise that when it comes to retirement, many women are not on equal footing with men.

In fact, about 25 percent of Canadian women have put away less for retirement than their male spouses. Also, consider that about 22 percent of women have a formal retirement plan compared to 32 percent of men; 43 percent of women ages 55 and older have no formal plan at all.

Additionally, women are more likely to take time off work to care for children or other family members. When they do re-enter the workforce, they are more likely to work a part-time job that may not offer retirement benefits. All these factors can widen the wage gap for when women can feasibly retire.

Women also live, on average, about four years longer than men. A longer lifespan is a good thing, but it also presents more financial challenges. For example, women are more likely than men to need costly long-term care.

How to address the unique challenges women face

One of the best ways women can prepare for retirement is by saving as much as possible as soon as possible.

Participate in any retirement plans that may be offered by your employer, whether that be a pension plan, or a group registered retirement savings plan (Group RRSPs). If you are self-employed or don’t have access to a workplace pension, you may qualify for a voluntary retirement savings plan that works similarly to the employer-sponsored options.

Additionally, max out contributions to a registered retirement savings plan (RRSP) if you can. You can contribute up to 18 percent of earned income you reported on your tax return in the previous year, up to a maximum of $29,210 in 2022. You can also carry forward RRSP contributions that you were unable to use in a particular year.

The cost of long-term care services, like a room in a nursing home or assistance with daily activities (such as bathing and dressing), can vary depending on where you live. In most cases, you should be prepared to foot at least a portion of the bill. In fact, over the next 35 years, the cost of providing long-term care to aging Canadians is estimated to reach $1.2 trillion; only half of that amount is covered by current government programs.

Prepare for these costs and protect your retirement savings by investing in long-term care insurance. Coverage can help pay for some of the long-term care costs not covered by Canada’s public health system. Purchase one of these plans through a health or life insurance company. 

Despite the ways that gender equity has advanced, women are still at a disadvantage when it comes to saving for their future. Taking steps to shore up your retirement plan today can help prepare you for financial success and security in the long run.
 

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