A Reality Check For Women

This week's article is more of a social comment, than a call to action. Women make up more than half the Canadian population and often live longer than men. Statistics Canada confirms that anywhere from 75% to 90% of women will eventually have to take control of their own financial affairs because they have never married, are widowed or divorced, or are the main income earner in their families.

Living longer and earning less are statistical facts. That is why women must save more than men. The average annual retirement income and personal savings for men is less than $20,000. Women, by comparison have less than half that amount. Given that women on average live half a dozen years longer than men, they are more likely to run out of funds before they die.

Women generally earn less than men throughout their careers and therefore save less overall. This is one reason why 'pay-equity' has become the issue it has in recent years. This inequity can further be explained by the fact that more women than men work in smaller businesses, which are less likely to offer pension plans. Surveys have shown that over 50% of men are covered by employer-sponsored pension plans, compared with around 40% of women.

Women often leave their jobs in order to raise families, move with their spouces to new employment opportunities, care for elderly parents or handle other domestic issues. Because of these disruptions, female employees may not have put in enough time to qualify for company plans or they may fail to build up much value in the plans due to the lack of years on-the-job.

If divorce or death of the husband occurs, women may lose all or part of the spouse's retirement income. Unfortunately, there still seems to be the belief that a surviving spouse can live off accumulated savings.

Women are often different as investors. They may be more conservative and risk-averse than men, focusing on short-term issues such as paying household bills and managing the family's financial affairs. While providing balance to more aggressive styles of investing, sadly, statistics show us that many women can no longer afford to be satisfied with the relative safety of fixed-income investments.

Gary Elliott CFP, is with Partners in Planning Financial Services in Chilliwack, British Columbia.