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Retirement savings

March 08, 2017

How the gender gap affects your retirement savings

You know about the facts of life. Here are the facts of life expectancy – what the difference between men and women can mean to your finances.

Chances are, someone once sat you down and told you the facts of life.

Today, I’m sitting you down to tell you the facts of life expectancy. Some are obvious, but the implications for your life and finances probably aren’t so clear.

The facts of life expectancy

  • Women live longer. A 65-year-old Canadian woman can expect to live another 21.7 years, on average. For men, it’s 18.7 years.1
  • Women live longer in poor health. Women can expect 6.3 years of poor health; for men, it’s 4.3 years.2
  • Men experience better functional health (how well the body handles everyday physical tasks) than women, in every age group (except between 20 and 34, where there’s no difference).3
  • Men are typically at least 2 years older than their wives or female life partners.
  • Past age 65, women outnumber men and the gap continues to grow from that age.
  • Older women are more likely to live alone, with relatives or in a retirement home than with a partner. By their mid-70s, less than half of women live as part of a couple. In contrast, most men live as part of a couple until about age 88.4

“I encourage everyone – but especially women – to get involved with their finances at a younger age,” says Cindy Crean, Managing Director, Private Client, at Sun Life Global Investments. “If a partner dies, becomes seriously ill or starts to experience dementia… that’s not the ideal time for a woman to have to start to become familiar with the family finances, or become familiar with the family financial advisor.” Too often, a newly widowed woman finds herself socially isolated and living in a home that no longer meets her needs. “I often suggest that people downsize their homes while they’re still healthy and can form new social bonds,” Crean says.

Implications of the gender gap

Most women with husbands or male partners will outlive their partners. Chances are, for at least some of those extra years, women will experience poor health. That’s a scenario women (and men) must at the very least plan for. There are plenty of implications to consider. 

Life annuities are especially useful for women. They provide guaranteed income for their longer lives. Unfortunately, the income from regular life annuity payments purchased with the same lump sum will be higher for men and lower for women. That’s not sexism, it’s basic math. Regular life annuity payments to women are smaller because women can expect to live long enough to receive more payments than a man would. For example, if 70-year-old twins John and Jane each buy a life annuity on the same day, each using $100,000 from an registered retirement savings plan (RRSP), Jane’s after-tax annual income from her life annuity will be about 10% less than her twin brother’s. Try some what-if scenarios with our annuity calculator to learn more.

Consider: Annuities are an ideal way to pay for lifelong basic expenses like food, housing, clothing and taxes. Think of a life annuity as a way to top up other lifelong income sources like the Canada/Quebec Pension Plan, Old Age Security or a defined-benefit pension plan.

It’s not as easy for women to build wealth with RRSPs. RRSP contribution room is based on earned income. On average, working women earn less, which makes it harder to save for a longer retirement. There are several ways to measure the wage gap, all pointing to a tougher time for women trying to build RRSP wealth:

  • Full-time workers: Women earn 72% of what men earn5
  • Part-time and full-time workers: Women earn 66.7% of what men earn6
  • Income, by hours worked: Women earn 87% of what men earn7

    Consider: If your spouse earns significantly more than you, he (or she) can contribute to a spousal RRSP in your name, or give you money to put in your tax-free savings account (TFSA). It’s a smart move for women to contribute as much as possible to a TFSA because its contribution limit isn’t tied to earned income. Get professional advice to minimize risk and maximize growth in your RRSP and TFSA.

CPP survivor benefits may mean a pay cut when you can least afford it. You may not realize it, but the Canada Pension Plan pays several different types of income, including retirement pensions, survivor’s benefits and disability benefits. When a spouse dies, the surviving spouse may be eligible for CPP survivor benefits. If you’re the surviving spouse and are 65 or older, you may continue to receive up to 60% of the amount of the CPP retirement pension your spouse had been receiving – not the full amount. You might not even get the full 60%, as there are caps on the total amount you’d receive:

  • The most that can be paid to someone eligible for both a survivor’s benefit and a retirement pension is the maximum retirement pension.
  • The most that can be paid to someone eligible for both a disability benefit and a survivor’s benefit is the maximum disability benefit.

    Consider: Talk to your financial advisor or Service Canada for more information about survivor’s benefits. (Similar survivor’s benefit rules apply to the Quebec Pension Plan.)

Women have lower retirement incomes. The 2016 Sun Life Retirement Now Report found that the average Canadian retiree is living on 62% of his or her annual pre-retirement income. But because women earned less than men while working, 62% of a smaller working income results in a smaller retirement income – and women reported living on just under 60% of their pre-retirement income, rather than the 62% average for both sexes.

The role of insurance

Adequate life insurance can help a surviving spouse continue to be financially comfortable. For shorter-lived men, this has long been understood. But it’s often even more important for women to have enough life insurance, because of the role they commonly play as primary caregivers for children, grandchildren, ailing spouses or aging parents.

Personal health insurance can be especially valuable for women, given their poorer functional health and longer years of poor overall health. Critical illness insurance and long-term care insurance are highly beneficial to both men and women, but can be vital for widows and single women with a smaller personal-care network.

It’s also important to keep your will up to date. After the death of one partner, the surviving partner should review his or her will, to ensure it reflects current wishes and priorities. Can more money be directed toward charities? Do children need more or less support than earlier anticipated? Would you like to create a one-time bequest or an ongoing legacy to benefit a hospital that’s provided important care, or to ensure that research continues into a disease that has affected your family?

Your financial plan should reflect all these issues. If you try to manage these facts of life expectancy with on-the-fly decisions, you might be leaving it 10-20 years too late to make the best choices. That can easily put your future at risk. To put it bluntly, you need an up-to-date, comprehensive financial plan.

According to Cindy Crean, it’s possible to make a number of decisions early that can anticipate later declines in health or decision-making capability. For example, a financial advisor can help you ensure you have a guaranteed income for life, or you can make family members aware of your wishes before dementia becomes an issue.

As you can see, the implications of the facts of life expectancy aren’t obvious or straightforward. Why not talk to an advisor for the advice and professional help you’ll need?


1. Statistics Canada, CANSIM Table 053-0003.
2. Statistics Canada Health-Adjusted Life Expectancy
3. The Statistics Canada Health Utility Index measures a person's functional health based on 8 attributes: vision, hearing, speech, mobility, dexterity, emotion, cognition and pain.
4. Statistics Canada, Age pyramid for the population aged 65 and over, by living arrangement and sex, Canada, 2011
5. Statistics Canada, Average female and male earnings
6. Statistics Canada, Average female and male earnings
7. Statistics Canada, The Evolution of Canadian Wages over the Last Three Decades 

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