Helping woman planning retirement

There’s no getting around it. Women face more challenges in saving and investing for a secure future than men. The reasons are many:

  • Lower wages. Working women continue to earn less than working men. For every dollar earned by a man in Canada, a woman earns 87 cents.1 Lower earnings means less money available to save.
  • More time out of the workforce. Women are more likely to take time out of work to care for kids or a loved one. One study estimates that women on average work 28 years in their lifetime while men work 38. That’s 10 years in which women are not earning income. This reduces their ability to save for retirement.2
  • Lower amount of savings. Lower wages and fewer working years result in lower amounts of savings. For example, data from group savings plans managed by Sun Life – the largest database of such plans in Canada – show that men have average account balances that are 40% to 45% higher than those of women.3

You can guess the result. Single women have a higher rate of poverty than single men in retirement. Single female seniors are more likely to receive guaranteed income supplement payments (between 44% and 48%). This is compared to single male seniors (between 31% and 37%).4

Changing the world – one Client at a time

As an advisor, you can’t solve societal issues like the gender wage gap and caregiving demands. But you can help guide your individual female Clients towards a more secure retirement.

Think of it as an evolution, not a revolution. And it all starts with information that’s right at your fingertips. Take a look at your book of business, and at the savings rate and asset mix of your female Clients. How does it compare to the data from male Clients? Is there a gap in the rate or amount of savings? Or, perhaps there’s a gap in the adequacy of the asset mix for generating needed long-term growth?

There may very well be, especially as it relates to asset mix. A recent University of Waterloo study concluded the following:

“In general, women tend to hold less risky portfolios, whereas men disproportionately choose high-risk investments, which can lead to higher returns and greater wealth accumulation among men.”5

Like men, women need the tools and knowledge to make good financial decisions. This means ensuring they have the growth investments they need to generate adequate long-term returns.

But when Canadians were asked about their financial knowledge, a clear gap in confidence appeared:

  • 46% of women say they lack sufficient knowledge about how much retirement income they’ll need (versus 36.5% for men),
  • 35% of women say they lack sufficient knowledge about how to select investments (versus 26% for men) and
  • 32% of women say they lack sufficient knowledge about government programs such as CPP/QPP and OAS (versus 24% for men). 6

What’s more, a Statistics Canada analysis of financial literacy testing found a similar gap between men and women. But it also uncovered an interesting trend. Many Canadians are generally confident in their financial knowledge, but tend to overstate how much they actually know.

For instance, of those respondents who rated themselves as knowledgeable, about 1 in 4 men and 1 in 3 women scored 50% or less on the 14‑question quiz. On the flip side, about 1 in 4 men and women who reported a lack of confidence in their financial knowledge understated the extent of their financial literacy by scoring 79% or more on the 14 questions.7

What this means is that we can’t confuse a lack of confidence with a lack of knowledge. Your female Clients may already have the financial knowledge to make and support good investment decisions. But they may also lack the confidence to put those decisions into action.

So, if you see a gap in your book of business, especially as it relates to asset mix differences, take action. How can you do that? You can start by helping provide your female Clients with financial education when necessary. You can also encourage them to act confidently on that knowledge. This can go a long way towards bridging the gender investing gap and improving savings outcomes.

You may just have a few Clients who can use the extra care in learning about the benefits of (and need for) a growth element in their portfolios. And that’s okay. It’s all about changing female retirement outcomes – one Client at a time.

Strengthen your relationships

Being aware of the difference between women’s and men’s habits and attitudes towards retirement saving is more crucial than ever for advisors. This is especially true in serving female Clients, as satisfaction levels are low. An estimated 80% of women leave their advisor within 18 months of becoming a widow. This often happens because they don’t feel the advisor has taken the time to build a relationship with them.8

You have the ability to spot any gender investing gap. You can also help these “gap” Clients understand the importance of long-term growth in their portfolio. By doing this, you’ll strengthen your Client relationships. And a strong relationship is the best way to ensure you have a Client for life.

1 Statistics Canada, The gender wage gap in 2018

2 Diane Garnick, Gender Retirement Gap, 2016

3 Sun Life Financial, Designed for Savings, 2016

4 Broadbent Institute, An Analysis of the Economic Circumstances of Canadian Seniors, 2016

5 Curtis, Rybczynski, Are Female Baby Boomers Ready for Retirement? University of Waterloo, 2015

6 Sun Life Financial, Mind the Retirement Gap, 2015

7 Statistics Canada, Gender differences in the financial knowledge of Canadians, 2016

8 Deanne Gage, “Suddenly Widowed,”FORUM Magazine, November/December 2012.