Retirement planning... for women
Statistically, a large portion of our adulthood is spent retired. Kayaking, volunteering, yoga... we all have a long list of hobbies we want to do during this time. However, for women, there is an extra challenge.
Let's take a look at how to plan for this chapter and why it's important.
Why must women plan their retirement differently?
While women have similar professional and personal priorities as men, they generally focus less time on their finances. However, it's in their best interest to do so because their situations are different—the devil is in the details.
Longer life expectancy
Statistics show that life expectancy has increased over the decades, with women generally outliving men. Canadian women live an average of 84 years (This hyperlink will open in a new tab), which is four years longer than their male counterparts.
To cover these four extra years, women need to save more money.
Lower average salary
Even though the gender pay gap has narrowed over the years in Canada, in 2021, women still earned 11.1% less per hour (This hyperlink will open in a new tab) than men. In other words, for every dollar a man earned, a woman earned 89 cents.
Overcoming this gap either requires extra effort and discipline when saving, or investing in higher-risk, higher-return investments.
Career interrupted
Although an increasing number of fathers go on parental leave, women are more often than not the ones who interrupt their careers for their family.
These leaves, which shrink their financial cushion, mean that mothers have less time to save for retirement.
Since public pension plan benefits are based in part on a person’s average earnings throughout their working life, women’s benefits will be lower as a result of this time away. Would you like more information on governmental retirement income? Use the Canadian Retirement Income Calculator (This hyperlink will open in a new tab).
How to plan for retirement?
Be kind to your future self! Don't underestimate your financial in for retirement, and start preparing as soon as possible. Waiting until the last minute could limit your options.
Don't know much about savings and investments? No problem! There are plenty of ways to get started. For example, you can attend free retirement planning workshops—time well spent!
Set your goals
You know what you want to do, so you’re in the best position to plan your retirement. With a clear vision, you can develop a strategy to reach your goals.
Trust yourself and don't let your emotions guide your decisions.
Get financial advice
To plan your ideal retirement, consider working with an advisor.
Their expertise goes beyond the world of investments. They’ll analyze your needs and calculate the amount you’ll need to save for the future, while considering inflation. They can even recommend savings strategies to people living on a tight budget.
Diversify your portfolio
When it comes to saving for your retirement, RRSPs and TFSAs are your friends. Consider portfolio diversification (in addition to your retirement plan) in your investment decisions.
Ideally, you should invest in a variety of products and sectors. This strategy is more profitable and less risky than putting all your eggs in one basket.
Broaden your horizons
As a women, you now know that, statistically, you need to save more than a man to enjoy your dream retirement.
Have you taken leaves from work? Are you earning less than you’d like (many will raise their hands here!)? Ask about what you can do to maximize your savings and investments.
Retirement isn't an end, it's a beginning. And you deserve to begin each new chapter in your life with confidence!
