Women face unique money challenges

Picture of Rubina Ahmed-Haq, Personal Finance Expert

November 18, 2021

By Rubina Ahmed-Haq, Personal Finance Expert

In saving for the future, women face unique challenges compared to men. From greater childcare responsibility, to longer life expectancy to pay equity, women have more to consider with how much they should be saving.

A report by HSBC Canada called “The Future of Retirement: Bridging the Gap,” found 51 percent of women don’t know how much they need to save for retirement or have not started saving yet. With the many factors women face, many should be almost doubling their retirement savings compared to their male counterpart. This isn’t to have a richer nest egg, but to have one that equals that of a man.

Here is why it’s important for women to save more.

Life expectancy

In Canada, the average life expectancy of a man is 80 years while for a woman it is more than 84 years. Women therefore have, on average, more retirement years to plan for. Added to this, a woman married to an older male partner may spend more years managing her money on her own.

In Ardelle Harrison and Leslie McCormick’s “Bank on Yourself: Why every woman should plan financially to be single. Even if she’s not,” the writer’s emphasis on how the likelihood of women being single in retirement is statistically very high. They say 90 percent of women are likely to manage their money in retirement on their own. This can be because they’re widowed, divorced, or never married. Preparing for this eventuality is key to financial wellness for all women.

Working years

The problem with gender neutral advice is it assumes we all will work full time for 40 years and contribute to our retirement savings the whole time. But for women, the reality is many spend years working part time or take time away to raise children or support aging parents.

According to Statistics Canada, in 2017, the most common reason for women aged 30-39 to work part time was childcare. For women 35 and 39, nearly half were working part time in order to fulfill childcare duties. These can be key years for workers to build their careers and gain promotion. Years many working mothers simply can’t be present in.

Earning potential

Pay equity is still an issue for working women. It is defined as equal pay for equal value, something working women have yet to accomplish.

According to The Human Rights Commission in 2020, a woman in Canada earned 0.89 cents for every dollar a man earned. That is equivalent to a $3.52 hourly wage rate gap (or 11 percent) between men and women. This means women have to work more in order to save the same as men.

An old adage is to save 10 percent of your before tax income to have enough to retire. But with women earning less, this formula doesn’t work. In 2018, women’s yearly median income was $28,120 compared to men’s $40,890.

Unpaid work

Women are more likely to take part in unpaid work as well. Giving women less opportunity to focus on the paid economy or on education to further their careers.

A report by Oxfam Canada and the Centre for Policy Alternatives called Making Woman Count finds women do six hours of unpaid work a day. Compare that to men who do as little as 30 minutes.

Women’s financial reality

In Canada, women are 1.5 times more likely to live in poverty in retirement than men, according to the World Economic Forum. It also finds women on average save 30 and 40 per cent less than men.

Women should put their retirement savings above all other savings. This includes their children’s RESP. There are countless scholarships and grants available to students, but nothing like that exists for retiring Canadians. For example, there is no so-called “senior scholarship.”

As well, women should keep up their savings while they are taking time away raising children. Have an arrangement for their working partner to contribute to a retirement savings plan. And finally, women should keep on top of their savings journey. Using a simple retirement calculator like the Government of Canada’s Canadian Retirement Income Calculator, can help keep track of where you are with savings and being financially on track.

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