Women face a lower standard of living in retirement, according to a new study
By Caitlin Finlay
An analysis of more than 14,000 Group Retirement Income Plan account balances shows that women retire with 30% less in retirement savings than men do. While the study revealed that most men retire with approximately $100,000 in retirement savings, women average about $30,000 less.
The analysis, conducted by the consulting and asset-management firm Mercer Canada, suggested that women face a reduced standard of living in retirement as a result of having less annual income than men and a longer lifespan that can bring with it the associated financial costs of long-term health care.
Even though the analysis found that women’s investment portfolios tended to do slightly better than men’s because they were more diversified, women tended to contribute less of their pay to their retirement fund—almost 1% less. While a 1% savings rate gap may not seem significant, it means that women need to work two years more than men to have adequate savings for retirement. The study attributed the gap to the gender pay gap and the greater likelihood women will experience career interruptions. The current pandemic has worsened the problem of career interruptions as women take time off work to care for sick relatives or stay home with children who are attending school virtually.
The study encouraged employers to close the gender pay gap, reduce workplace inequities, and build awareness around retirement savings tools available to employees such as employer’s matching benefits.
“Financial wellness means giving employees both the knowledge and the ability to chart their financial future,” Jillian Kennedy, the leader of Mercer’s Financial Wellness business, said in a press release. “It’s not just the right thing to do—it’s the smart thing to do. Organizations that invest will see the impact to their productivity, their workforce morale, and ultimately, their bottom line.”