Since our Mother's and Grandmother's day, the financial picture for women in Canada has changed. But, by how much? A 2019 study shows 70% of Canadian women aged 25-34 were university graduates. BUT only 62% of Canadian women over 18 were employed. Women influenced 55% of Canadian investable assets. By 2028 they'll control $3.8 trillion of wealth. Women are earning more money than ever before in history. They're becoming better educated, and living longer than men. These things are challenging the status quo. But, women have three strikes against them. The fact that they live longer. The fact that they earn less. And, the fact that they have more time out of the workforce. So, if you feel like you're falling behind. If the financial information you're receiving isn't resonating with you. If the glass ceiling feels firmly still in place. You're not alone. People's experience will vary of course. Some will have late entry into the workforce because of staying home to raise a family. Others are childless by choice. Some are comfortable with financial decisions. Others are at the beginning stages of the money journey. We're all unique and life is a personalized experience. But the society we live in and the financial systems in place aren't yet fully aligned with women's lived experience. There are unique challenges a woman faces when saving to fund her own retirement.
<On the slide:> Source citations:
- OECD, "Country Note: Canada," Education at a Glance 2019, 2019
- Statistics Canada, "Table 14-10-0327-01: Labour Force Characteristics by Sex and Detailed Age Group, Annual," 2020
- CIBC Economics, The Changing Landscape of Women's Wealth, March 2019 <End slide>
Women have made great strides in the last half century. We're better educated, have greater responsibility in the corporate world, and are leaders in many professions. Despite these successes, women still face gender-related obstacles to wealth creation.
<On the slide:> TITLE: Women's unique financial challenges. There is a list of five key challenges:
- Earnings gap
- Work interruption
- Longevity
- Suddenly single
- Confidence gap <End slide>
Women still earn, on average 84 cents on the dollar as compared to men. That means that for a man's $70,000 salary, a woman earns just $58,800. The gender pay gap is worse for those who face multiple barriers. This includes racialized women, Indigenous women, and women with disabilities. Though it differs by age group, the gap starts from a young age and carries into the senior years. According to a 2018 Girl Guides of Canada report, girls aged 12 to 18 experience a summer job gender pay gap of almost $3.00 per hour. And a recent Canadian women's foundation study finds college-educated women make about 90 per cent as much as men at age 25, but only about 55 per cent at age 45. The earnings gap contributes to a gendered pension gap. Women retire with only about 80% of the pension that men retire with according to a 2021 Mercer CFA Institute report. Unfortunately, women also have a higher cost of living, known as the "pink tax." The 'pink tax' refers to the extra amount charged to women for certain products or services. According to a 2021 analysis by ParseHub, overall, women in Canada pay upwards of 50% per cent more on average than men for items like body wash, deodorant, and razors.
<On the slide:> Source citations:
- Canadian women's foundation, sourced June 2024
- Mercer CFA Institute, 2021
- 2021 analysis ParseHub <End slide>
Women also have more demands on their time than ever before. We're juggling career, caring for a family, and managing a house-hold, on top of "everything else". Because of the demands on women's time, women typically leave the workforce more often than men. This is typically for extended periods of time to care for children or other family members. These are of course very important and necessary tasks, but they're also tasks that come at a financial cost.
A lot of women will hold lower paying or part-time jobs that offer more flexibility. Often these jobs don't offer retirement plans. The "motherhood penalty" is the financial penalty that women may experience for having children. It ranges from seeing their income dip, to being sidelined for promotions and being viewed as less committed to their job.
As cited by Xuelin Zhang in "Can Motherhood Earnings Losses Be Ever Regained?" employment and earnings conditional on being employed, fall sharply around the time a woman gives birth. It may also remain permanently lower well after. There's a dynamic that perpetuates itself. If a is child is sick and someone needs to take time out of their workday, it's likely going to be the woman. Because they're paid less, it makes more economic sense. And, thus, it's a self-fulfilling prophecy.
Unfortunately, the motherhood "penalty" isn't the only one. Another is the 'good daughter' penalty. This is where women take time off work to look after elderly parents or other family members. According to Stats Canada, in 2022, 52% of women aged 15 and older (or almost 8.4 million women) provided some form of care. This was to children and care-dependent adults, whether paid or unpaid.
Women were much more likely than men (at 42%) to provide care. 7% of these women are considered dual caregivers. They're caring for both children and care-dependent adults at the same time. Even menopause can have a detrimental effect on women's financial well-being. It's often cited on income protection claims as a factor forcing women to take time out of the workplace.
There is a 14% drop in the number of working women in Canada between age 45 and age 59. This compares to a 10% drop for working men. While everyone's menopause journey is unique, 95% of women in a recent survey by the Menopause Foundation of Canada reported that they experience symptoms. An average of seven symptoms were reported. Common symptoms are hot flashes, sleep disturbances and mood swings. Lesser known symptoms are anxiety, urinary incontinence and heart palpitations. For too many women, it becomes too much. An estimated 1 in 10 will leave the workforce due to unmanaged symptoms. Could menopause be the missing link to explain why more women aren't breaking through the glass ceiling? The age range impacted by menopause intersects with a time of life when women are in, or poised for, increasingly senior leadership roles.
Why, at the peak of their earning potential, are women opting to take a pay cut or leave paid work entirely? Let's link together the facts. Women earn less over their careers, experience work interruption, and leave the workforce earlier than men. It's clear to see how we're financially affected in the workforce. Next, let's take a look at some other financial effects of being a woman.
<On the slide:>
· "5% - 40%" - "The motherhood penalty" - "Impact on employment earnings due to becoming a mother¹"
- "52%" - "The good daughter penalty" - "Almost 8.4 million women in Canada provide some form of care²"
- "14%" - "Between ages 45 and 59" - "Drop in the number of working women in Canada³"
Source citations:
- Zhang, "Can Motherhood"; "Can Motherhood" 1678.
- Stats Canada, 2022
- Menopause Foundation of Canada, 2023 <End slide>
Women have longer life spans than men. This isn't new information. It is; however, very important information. It means women need more money over the course of a lifetime. We also need to make our savings last longer than men do. Medical and public health advances have brought about dramatic improvements in life expectancy over the last decades. The current average life expectancy for a Canadian female is 84 years. This is the "from birth" expectancy. A woman retiring at age 65, can expect on average, to live to age 89. It's no wonder a recent study showed that 80% of women are concerned about outliving their money!
<On the slide:>
- Average life expectancy for Canadian women: 84 years
- 81% of centenarians are women¹
- At age 65: A woman in Canada can expect to live another 24 years!
- 80% are concerned about outliving their money2
"Sources:
1. Canada Protection Plan, What is the Life Expectancy In Canada?, April 2020
2. Real Simple, Why Women Need to Be Financially Planning for a 100-Year Life, June 2021 <End slide>
When you think widow, you may be picturing a woman in her 80s or 90s. The reality is that the average age for widowhood in Canada is 56. Financially, widowhood can be devastating. There is often not enough time to rebuild assets, and they can expect to live many more years. 76% of widows wish they'd been more involved in making financial decisions when their spouse was alive. 53% of widows said they didn't have a plan for what would happen if one of them died. And in 2019, close to 28% of baby boomers had reportedly saved less than $10,000 for retirement. This will leave them open to major financial hardships during their final years.
<On the slide:>
- 1.5 million widows in Canada¹
- The average age for widowhood is 56¹
- 76% of widows wish they had been more involved in making financial decisions when their spouse was alive²
- 53% of widows said they did not have a plan for what would happen if one of them died³
- 16% of elderly women on their own live below the poverty line⁴
Sources:
1. Statistics Canada, CANSIM, table 0051-0042 (2020)
2. Wealth Professional, Wealthy women let their spouses make key financial decisions, March 2019
3. Merrill Lynch/Age Wave study, Widowhood and Money: Resiliency, Responsibility and Empowerment, February 2018
4. Canadian Women's Foundation, The Facts about Women and Poverty in Canada, 2022 <End slide>
Evidence shows that women are less self-assured than men when it comes to financial decision-making. 46% of women say they lack sufficient knowledge about how much retirement income they need. 35% of women say they lack sufficient knowledge about how to select investments, and 32% of women say they lack sufficient knowledge about government retirement income programs. This lack of confidence often means women tend to take less risks in their financial decision- making. This can lead to lower returns on investments. Or, so we've been told. But, what's actually the truth?
<On the slide:> Source: Advisors Edge, Helping women reach their retirement goals, November 2019 <End slide>
The truth is, in spite of the challenges we face, and in spite of the industry not being fully aligned to our needs, women often make great investors. We're 'risk-aware', less impulsive, and tend to make fewer trades than men do.
According to a 2022 report from Wells Fargo, women on average take on about 82% of the risk that men do. But their portfolios performed better when adjusting for the levels of risk. High-risk investments that promise huge potential gains can be alluring. More often than not, they don't deliver. Women tend to avoid high-risk trends. They make investments that are more likely to deliver gradual, long-term growth over the years. This is often proving to be more lucrative in the long run. In a 2017 survey by Fidelity Investments, only 9% of women thought they could do better at investing than men. However, research consistently shows that this isn't the case.
According to an analysis from Fidelity in 2021, women saw returns that were 0.4% higher over a 10-year period. While 0.4% doesn't sound like much, even slightly higher returns can mean tens of thousands of dollars more money in the long run. Women tend to have a measured, cautious approach to investing and personal financial planning. Research has found that women tend to make investment decisions in a less impulsive manner than men. According to a 2022 survey from Nationwide, only 8% of women withdrew money from their retirement accounts during periods of market fluctuation. This compares to 15% of men. It's difficult to remain calm when the financial markets are unstable. But doing so can lead to greater investment success. People sometimes think that the more active you are at trading stocks, the more money you'll make. One of the best ways to actually build wealth in the stock market is to invest in good companies and hold them for a long time. While it's possible to sometimes make money from short-term trading, it's riskier and usually doesn't pay off as well.
A study from UC Berkeley found that men trade about 45% more often than women. And that extra trading lowered their returns. The higher-frequency trading shown by men in the UC Berkley report was attributed to overconfidence. This can lead to impulsively taking greater risks, without looking at the bigger picture. Women, on the other hand, are more likely to deliberate before placing a trade. Generally, the report showed that they don't take sub-optimal setups as often as men do. So they tend to have a higher winning percentage. In summary, while women may lack confidence in themselves as investors, hopefully we can change that narrative. The numbers just aren't backing it up.
<On the slide:> Sources:
1. 2021 Wells Fargo report;
2. 2021 Fidelity report;
3. 2022 survey from Nationwide.
4. University of California Berkley <End slide>
The key risks we've covered demonstrate how important it is to take charge of your financial future. You wouldn't remodel your house or apartment without giving it a lot of thought and making SPECIFIC design choices. The same thing applies to financial and retirement planning. You need to know what you're really looking to accomplish. What kind of life do you really want to lead? Then align your budget with that. Align your financial plan with that. Align your Investing with that. It all links together.
<On the slide:> TITLE: Take control. There are 5 key action steps:
- Identify and prioritize your goals
- Start with a budget and develop a plan
- Learn the fundamentals of investing
- Talk to a trusted financial professional
- Review, reassess, and rebalance <End of slide>
Only you can identify your goals, no one else. After you've identified your goals, you'll need to prioritize them. Think about where you are in life. Consider which goals to tackle first. And which goals may impact others. Are there any special concerns you might have?
<On the slide:> TITLE: Identify and prioritize your goals.
There is a list of 5 common financial goals:
- Education
- Housing
- Business
- Retirement
- Passing on wealth <End of slide>
Once your goals and priorities are identified, the next step is to link it with your money. Develop, or revisit your budget and financial plan. A key to money management is to know how you spend your money. When you have that information, you can plan a budget that works for you. Compare your needs and wants, and control and monitor your spending regularly. Whenever your income changes, it's a good time to reassess your budget.
<On the slide:> TITLE: How to create a budget. The slide shows a simple four-step process:
- List all sources of income
- List all monthly expenses
- Look at needs versus wants
- Control and monitor spending <End slide>
A basic understanding of how inflation, taxes and diversification can affect your investing strategy is needed. It'll help you make better-informed investment choices.
In addition to growing your money, you may wish to consider protecting it. According to 2021 Canadian Cancer statistics, breast cancer is the most common cancer in Canadian women, with the exception of non-melanoma skin cancer. 1 in 8 women are expected to develop breast cancer during her lifetime. 1 in 34 will die of it. But the #1 cause of premature death of women in Canada is actually heart disease and stroke. Estrogen's protective effect on women's heart and brain health fluctuates at different life stages. This results in unique risk factors for women. There is good news though! Medical advances mean we're surviving more and more critical illnesses. The bad news is the healthcare system doesn't cover all the costs associated with getting sick and surviving.
Protecting your income and savings is an important part of your plan. There are different insurance options to consider. For example, life insurance, health insurance, critical illness insurance and long-term care insurance. During your working years, it's important to focus on protecting your income. As you move toward retirement, it becomes more important to protect your assets.
<On the slide:> 3 sections:
(1) Financial protection – Life insurance
Term – protection for short-term needs
Permanent – protection for long-term needs
(2) Financial protection – Health insurance
Long-term care
Critical illness
Disability
Health & Dental
Accidental death & dismemberment
(3) Financial protection – Other
Property insurance (house, condo, apartment)
Vehicle insurance
Emergency account
CPP/QPP disability benefit
Workplace coverage <End slide>
We've covered a number of gender-specific obstacles and barriers that women face when reaching financial goals. Recognizing the hurdles and building a plan around them can help. So can speaking to professionals for guidance.
<On the slide:> A chart:
Earnings gap: Try to start saving early. Do your research. Negotiate your salary.
Work interruption: Maximize your retirement benefits. Talk about flexible workplace options.
Suddenly single: Be actively involved in making financial decisions. Build a plan that works for a couple or as individuals.
Confidence gap: Learn the basics of investing. Consider working with an advisor.
Longevity: Long-term care insurance policies. Consider diversification of products.
Source: www.Kiplinger.com/slideshow/retirement/T047-S001-reasons-women-will-never-retire/index.html <End Slide>
<On the slide:>
Thank you! The information provided is of a general nature and can not be construed as personal financial or legal advice. Neither Sun Life or its affiliates guarantees the accuracy or completeness of any such information. This information should not be acted on without obtaining counsel from your professional advisors, including a lawyer, notary, tax professional, or financial advisor (registered as Financial Security Advisors in Quebec) as may be applicable to your individual situation.
Group Retirement Services are provided by Sun Life Assurance Company of Canada, a member of the Sun Life group of companies. <End slide>