Are you unsure about your ability to plan and save for your retirement? If you’re a woman, you have plenty of company. According to the 2018 Sun Life Financial Barometer study, only 46% of women say they have the financial knowledge to make a plan for their retirement, versus 60% of men who say they do.
That’s not news to Zack Faubert-Tetreault,1 a Sun Life Financial advisor in Ayr, Ontario. He says that because women have specific financial planning needs, he isn’t surprised by the figures from the Barometer study.
“Based on my experiences with clients, those findings make a lot sense,” he says. “But there is some good news there that those numbers don’t show. Women are often much more disciplined with saving and are more open to becoming financially literate, compared to men. And because of that, they are well-equipped to make good financial planning choices once they have the knowledge.”
When saving for retirement, women face a particular challenge: They can expect to live longer in retirement than men, but they have less lifetime income to save for those non-working years.
Here’s how women can use their innate discipline and willingness to learn to overcome their retirement-saving challenges:
- Start saving right away. The sooner you start saving, the more opportunity your investments will have for long-term growth, increasing your chances of building a substantial nest egg. To get personalized recommendations on how you can reach your health, savings and retirement goals, use the Bright Start Tool. “The people who have the most success with their financial plans are the people who get started early,” says Faubert-Tetreault.
- Open an automatic savings plan. Set up an automatic savings plan or payroll deduction plan to contribute to a company pension plan or registered retirement savings plan (RRSP). Instead of contributing only at the annual RRSP deadline, you’ll be investing your money sooner and giving it more time to grow. And the money in your RRSP is tax-sheltered while it’s growing, so you don’t have to pay tax on it until you take it out – which will presumably be after you retire, when your taxable income (and the percentage of it that you pay in income tax) is lower than while you’re working.
- Contribute the maximum to your RRSP. Look for your RRSP contribution limit on the Notice of Assessment you receive from Canada Revenue Agency after you file your tax return. Any unused room gets carried forward each year, so if you haven’t contributed as much as you were entitled to in years past, you can make it up now. To see how your RRSP contributions can affect your retirement savings, use the RRSP calculator. You may even want to consider an RRSP catch-up loan to help you maximize your contributions. But only borrow as much as you know you’ll be able to pay back within a short time, such as the amount of your expected tax refund.
- Make a plan. An advisor can help you set retirement savings goals and create a financial plan to meet them, and can help you choose investments that jibe with how comfortable you are with risk.
- Pick an advisor who gets you (not just your partner). It’s important to find an advisor who’s a good fit, whether you’re single or married. “Often one spouse takes a role in choosing the financial planner, and sometimes the other spouse doesn’t feel comfortable with that person,” says Faubert-Tetreault. When looking for an advisor, make a checklist of what you need from a financial planning and personality perspective. It’s also important to speak up if you don’t feel comfortable with your advisor. “Sometimes people just put up with things, but when it comes to your financial future, I don’t think it’s appropriate to ‘just put up’ with somebody,” Faubert-Tetreault says.
- Save for life’s big moments (like having a baby). While the federal government offers maternity and parental benefits through Employment Insurance, very few employers will make up the difference between what EI pays and your regular salary. With payments limited to 55% or 33% (depending on how much leave you decide to take) of your salary, up to a specified maximum, there will be a significant shortfall. You’ll need to supplement the EI benefits with your own savings, so it’s important to start saving in advance. (For more on maternity and parental leave, see: Should you take the extended parental leave?). Faubert-Tetreault suggests setting aside money in a tax-free savings account (TFSA). You can dip into a TFSA if you have to take time off work for other reasons, too, such as having to care for a sick relative, or for a sabbatical. With money put away for such planned and unplanned events, you’ll have less need to raid your retirement savings.
Women today are living longer and healthier lives than ever before. With the confidence that comes from knowing you have a solid retirement plan and money put aside for life’s big moments, you’ll be better equipped to enjoy that long and healthy future.
About the survey
The Sun Life Financial Barometer is based on findings of an Ipsos poll conducted between October 13 and October 19, 2017. A sample of 2,900 Canadians was drawn from the Ipsos I-Say online panel: 2,900 Canadians from 20 to 80 years of age. The data for Canadians surveyed was weighted to ensure the sample's regional, age, and gender composition reflects that of the actual Canadian population.
The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within +/- 2.1% at 95% confidence level had all Canadian adults been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to methodological change, coverage error and measurement error.
1 Zack Faubert-Tetreault, B.A.,* Sun Life Financial advisor
* Mutual funds offered by Sun Life Financial Investment Services (Canada) Inc.
Sun Life Assurance Company of Canada is a member of the Sun Life Financial group of companies.