When it comes to retirement, women generally face some unique challenges that require careful thought and astute planning now, to ensure financial security in the future.
Here are some female-first considerations for retirement planning:
Women live longer
At the root of these challenges is the simple fact that women need more retirement wealth because they live longer than men. Statistics Canada says the life expectancy at birth for a Canadian woman is 83 years, compared with 78.3 years for a man. Women who reach age 65 can expect to live, on average, another 21.3 years; men can expect to live another 18.1 years.1
This means a woman’s retirement savings must cover a longer time span. A longer life also increases the chances that long-term care will be needed.
Earning less means needing more
Even today, women typically earn less than men while working. This puts them at a disadvantage when investing for retirement. What’s more, over a lifetime, a woman’s income stream may be interrupted if she leaves the workforce temporarily or permanently to raise children.
In addition, according to Statistics Canada, women are more likely to quit jobs or reduce working hours to care for an elderly relative or friend.1 They’ll also spend more time than men in the caregiving role. All of it means less potential to accumulate retirement savings and perhaps less pension income.
The potential difference in lifetime earnings means women must save larger proportions of their income to achieve a lifestyle comfort level similar to that of men. Even if a woman has accumulated the same amount as a man, because of her expected longer lifespan, she should draw less each year to ensure the money lasts.
The perils of widowhood
Women are more likely to outlive their spouse than men. Statistics Canada says senior widows outnumber senior widowers by four to one; 45% of women aged 65 or older are widows,2 a situation that can dramatically affect retirement finances. For example, the death of a spouse may eliminate half or more of a couple’s income, but probably won’t cut expenses in half.
Studies have shown that, typically, women are more conservative investors. So not taking risks could become a risk in itself. Building adequate retirement savings and managing that wealth for a long retirement may be hindered by an overly conservative approach that does not include an element of portfolio growth potential.
If you are reading this and you are a married or single woman, or if you are a man with a female partner, mother, sister or close female friend or relative, we can help. We will take a female-first approach to help ensure a secure and comfortable retirement.
1 Statistics Canada Publication 89-503x, “Women in Canada: A Gender-based Statistical Report,” March 2016.
2 Statistics Canada Publication 11-621-M, “Widowhood: Consequences on Income for Senior Women,” June 2004.