Finance – Women Need To Save More
Gender gap prevalent when it comes to retirement
Women haven’t always made saving for retirement a priority. It’s often difficult to even think about it when you’re entrenched in the costs of raising kids and paying a mortgage, along with the expenses of everyday life. Eking out a family holiday often rates higher on the priority scale than an RRSP contribution. New research shows that women should be saving almost twice as much as men for their retirement. A survey by a leading U.S.-based retirement services provider TIAA (Teachers Insurance and Annuity Association), says that gender-neutral advice, when it comes to retirement, isn’t accurate. Franklin Templeton published a survey called the Investments’ Retirement Income Strategies and Expectations (RISE), which points out that almost half of working women are worried about outliving their money.
The Retirement Gender Gap, published by TIAA, found that in order for women to reach parity, they would need to save 18 per cent of their annual income if they were making $100,000.00 per year, as opposed to men who were recommended to save 10 per cent of the same salary.
WOMEN LIVE LONGER
In Canada, women outlive men by approximately four years. Added to this, women often marry a man around the same age or a few years older, which means that a woman will most likely be on her own for part of her retired life. This can be a financially challenging time, as any pension that a partner was receiving will stop, or be reduced. Health care costs go up as we age, so the price of living gets more expensive.
WOMEN TAKE MORE TIME AWAY
The TIAA survey points out that most company, and government, strategies assume that a person will be in the workforce for 40 years. But this figure is not accurate when it comes to women, who spend, on average, 29 years in the workforce. Women generally take more time off to raise children and take care of aging parents, which means that women are dealing with a smaller income to average out over their lifetime.
While Iceland recently announced that they will eliminate the gender pay gap, this isn’t so across the board – yet. Women tend to earn less, which reduces their ability to save. According to the latest numbers form Statistics Canada, in 2015 women were paid 87 cents for every dollar a man earned in the same job. Women also bear the burden of unpaid work. According to a report Making Women Count by OXFAM Canada and the Centre for Policy Alternatives, women do up to six hours of unpaid work per day, as compared to men who do as little as 30 minutes – resulting in women having less time to participate in the paid economy, or focus on education to advance their careers.
If an 18 per cent target is hard to reach, it’s still important to make a retirement plan a priority. When it comes to making investment decisions, women can be more aggressive in the types of products that they choose. If in a relationship, women need to ensure that their partner has an adequate life insurance policy. These types of conversations aren’t easy, but very important. It’s impossible to anticipate how life will play out, but with the high cost of living, women need to save more.
Personal finance expert and journalist, Rubina Ahmed-Haq holds a CSC designation, appears in Condo Life, on CBC Radio, CBC News Network, CTV Your Morning, Global Toronto ratesupermarket.ca and debt.ca. Follow her on twitter @alwayssavemoney. AlwaysSaveMoney.ca