Sept. 2: BEST FROM THE BLOGOSPHERE

September 2, 2024

Women must take action to avoid the “retirement gap” later in life

For every dollar a man gets in retirement, a woman gets just 83 cents – “a gap of 17 per cent,” reports Diane Peters, writing in The Globe and Mail.

“The gender pay gap is the gift that keeps on giving,” she writes. “Women make less than men during their working years and that differential continues into retirement.”

The 17 per cent gap, Peters reports, is cited in a 2024 report from Ontario’s Pay Equity Office.

When defining the income at play for calculating the gap, the article notes, the report refers to “government pensions, workplace pensions and personal savings.”

One might think that the disparity in wages/income between men and women has got better over time, but in fact, Peters writes, that’s not the case.

“The gap is larger than it was nearly 50 years ago. In 1976, the first year researchers were able to find meaningful statistics, the gap stood at 15 per cent,” she adds.

Janine Rogan, the Calgary-based author of The Pink Tax: A Financial System Designed To Keep Women Broke, says there are still steps women can take to avoid the effects of the gap.

“I think it’s important to connect these ideas so we [can] understand how insidious it is to gain and grow your wealth as a woman,” she tells The Globe.

 “Knowledge is really powerful. When you’re aware of [the gap], you can make different decisions,” she states in the article.

The article looks at the causes of the gap.

A big cause, writes Peters, is the general pay gap “which stands at 28 per cent in Canada.” In other words, women make less than men during their careers.

As well, the article points out, “women also contribute less to workplace pensions, personal savings, and contribution-based government programs such as the Canada Pension Plan – and these, on average, make up 78 per cent of a Canadian’s income in retirement.”

Taking time off to have kids also hampers retirement savings efforts, the article explains.

Women who take time off work to have children earn less, a fact the article calls “the motherhood wage penalty.”

Finally, women tend to spend more on their families.

“Oftentimes, it’s the woman’s responsibility to pay for childcare or summer camp or school [supplies]. He often pays the mortgage,” Rogan tells The Globe. “It may go unnoticed when women give their kids lunch money or run to the drugstore run for an aging parent. But those costs deplete women’s ability to save,” the article notes.

OK, making less, saving less (due to lower income), earning less while having kids and spending more on them as they grow. Quite the list.

So, what can women do?

The article quotes Leony deGraff Hastings, a certified financial planner from Burlington, Ont., as saying women should take full advantage of any pension of registered retirement savings plan through work where contributions are matched by the employer.

As well, if you are taking time away from work, perhaps to have a child, many employer pension programs allow you to “buy back” that time, and make pension contributions when you are back in respect of the time you were away.

Know all the rules of any workplace retirement program you are part of, she tells The Globe, adding that “financial literacy is vital for retirement planning.”

Don’t be afraid to accompany your husband when he meets with financial planners, or to get your own, the article adds.

If you don’t have a workplace retirement program to join, the Saskatchewan Pension Plan may be just what you are looking for. Once you have an account with SPP, you decide how much to save – you can start small and gear up as your income increases – and SPP does the heavy lifting of investing those contributions. When it’s time to collect, you can choose among such options as a monthly annuity payment for life, or the more flexible Variable Benefit option.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

The Globe and Mail

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