Why Canadian Women Need to Save More Money than Men for Retirement - Slice (2024)

FAQs

Why Canadian Women Need to Save More Money than Men for Retirement - Slice? ›

Why is there a pension gap in Canada? Ultimately, women are earning less money than men over what are typically shorter careers, often interrupted by breaks for caregiving. This means that women are contributing less to their pension pot, resulting in less money available when it comes time to retire.

Women typically have less money saved for retirement than men. Women generally earn less than men and can have career gaps due to caregiver roles that can lead to lower savings, lifetime wages, and Social Security.

In 2022, women saved on average $3,146, while men saved an average of $7,007, according to the New York Life's 2023 Wealth Watch survey. By the time women retire, we have 44% less saved than men, according to a Vanguard study.

More than half of Canadians nearing retirement don't have enough. If that's you, here's what to do. Don't panic: Experts say there are lots of steps you can take to get your spending on track, save with intention and still enjoy retirement.

Because they earn less, women often are unable to invest as much as men. However, in order to make up for other discrepancies in retirement benefits, women may actually need to invest more. And because women often leave work to bring up children or care for elderly relatives, they clock fewer total work hours.

From retirement wealth to retirement security

For a given amount of wealth, women face several obstacles relative to men in maintaining living standards in retirement. Women tend to live longer than men and thus often have to draw down their retirement wealth over a longer period of time.

There is a gender gap in retirement savings. Over their lifetime, on average, women earn less money than men and live longer. As a result, they have an increased risk of outliving their retirement savings.

Women are stereotypically seen as irresponsible spenders, but the data doesn't back this up. According to a 2019 Experian study, men carry more debt than women across nearly all categories, including credit card debt — the study found that men have $125 more in credit card debt than women on average.

Single women donors on average give higher dollar amounts to charity than single men. Divorced/separated, never-married, and widowed women are more likely to give, and give higher amounts, than their male counterparts. As women's incomes rise, they become more likely to give to charity than their male counterparts.

How much does the average Canadian have in the bank? ›

And its 2019 figures indicate that Canadians under 35 had average savings of $10,720 in the bank, along with $8,395 in a tax-free savings account (TFSA), and $9,905 in a registered retirement savings plan (RRSP).

American and Canadian governments provide many of the same types of services for people who have reached the age of retirement but Canadian retirees have fewer worries than their American counterparts. They enjoy a more generous retirement system.

As of the most recent information from Statistics Canada, the average Canadian senior family made $69,900 in 2021. When looking at a single senior, that dropped down to an average of $31,400.

Another big part of the problem when it comes to saving for retirement is that savings plans are not universally available in the U.S. Almost half of private sector employees ages 18 to 64, or 57 million Americans, do not have the option to save for retirement at work.

Statistically, according to the brief, 11.6% of women aged 65 or more years live in poverty, compared with 8.8% of older men. The rate is approximately 20% for older Hispanic and Black women and about 14% for older Asian women.

By the time you turn 55, aim to have seven times your current annual salary in retirement savings across all of your savings and retirement accounts. By the time you turn 60, you should have eight times your annual salary in retirement savings.

Women face unique challenges when it comes to retirement planning, including the “caregiver penalty,” a longer life expectancy and higher healthcare costs. A financial advisor can help design a financial plan that is reasonable and achievable, taking some of the stress out of this major life event.

Women working full time in the U.S. are still paid just 84 cents to every dollar earned by men — and the consequences of this gap affect women throughout their lives. The pay gap even follows women into retirement: As a result of lower lifetime earnings, they receive less in Social Security and pensions.

What's more, in 2023, a lower percentage of women feel financially secure (43%) and financially prepared for retirement (44%) than men (59% financially secure, 61% prepared for retirement).

The result: Men, who tend to die earlier than women, spend their time in retirement grappling with intensifying mental health issues and often find themselves with few friends or relationships outside their immediate families.