Unique life circumstances women face:
Women live longer than men
In Canada, life expectancy for women is 83.9 years for women, versus 79.8 for men.
The bottom line: The average age for widowhood is 56, making planning for the possibility of this life transition a critical part of your financial plan.
Women earn less than men
In 2020, a woman in Canada earned 0.89 cents for every dollar a man earned. That’s equivalent to a $3.52 hourly wage rate gap (or 11 percent) between men and women and translates into lower overall savings. In fact, according to a 2021 report, women retire with 30 per cent less wealth than their male counterparts.
The bottom line: On average, women experience a savings rate gap of nearly one per cent (0.81 per cent), meaning they need to work two years longer than men to be financially prepared for retirement.
Women tend to be more conservative with their money
Research shows that men are typically more confident than women when it comes to investing and taking risks with their money. This doesn’t mean women are more risk averse, rather they are risk aware. Women tend to focus on wealth in terms of security, rather than opportunity.
The bottom line: While being a more conservative investor isn’t necessarily a bad thing, being too conservative may mean your money won’t get the returns you need to meet retirement or other long-term goals.
More women take on a caregiver role
Canada’s aging population coupled with a renewed spotlight on the realities of long-term care homes during the pandemic, means that many families may experience a greater financial burden when it comes to caregiving. Many women take on the responsibility of caring for aging or ill parents – in some cases stepping away from the workforce and missing on a smooth career trajectory, pay raises and retirement contributions.
The bottom line: Women tend to prioritize their loved ones’ financial needs, often putting their own retirement plans at risk.
Women tend to experience decline in lifestyle post-divorce
Divorce isn’t easy for anyone but for women it can come with more financial challenges, particularly for those who haven’t been closely involved in family finances and who may have relied on their husbands for financial security. Already faced with an earnings gap issue, many women may have focused more on short-term financial priorities rather than building retirement assets.
The bottom line: Rebuilding assets and adapting to an increased cost of living, not to mention court and legal fees, can mean having to rethink lifestyle and retirement decisions.
Women tend to defer finances to their partner
Studies show that many women defer long-term financial decisions to their spouses, putting their own retirement savings at risk and leaving them ill-equipped for life without a partner. For many, a lack of financial literacy is to blame. According to Statistics Canada's 2014 Canadian Financial Capability Survey, only 31 per cent of women considered themselves to be financially knowledgeable compared with 43 per cent of men.
The bottom line: While women are increasingly taking responsibility for their financial wellbeing and retirement planning, lack of financial literacy can lead to poor financial decisions.