First the good news: Women, currently in their 50s, can expect to live to a median age of 86, outliving men by 4 years. And the bad news? We could outlive our retirement savings…

A recent survey by MarketWatch highlighted the differences in investing for retirement between women and men:


Women need more retirement assets than men for 3 reasons: Women live longer than men, women tend to earn less than men, and women tend to take more time out of the workforce than men.

Women are more successful investors than men for 3 reasons: Women stick to long-term plans, women aren’t as overconfident, and women ask more questions before making investment decisions.


Let’s look at how these observations play into the retirement plans of women versus men in Canada.

The first component of Canada’s retirement system includes Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), which are guaranteed benefits available equally to women and men. In the case of OAS, delaying benefits to age 70 provides a higher annual benefit. This makes even more sense for women than for men given women’s longer lifespans.

Benefits for women under the second component, the Canada Pension Plan (CPP), would generally be lower than for men given women’s lower average earnings, but are similar in relation to current income. Delaying CPP to age 70 would provide a significant boost to annual retirement earnings.

The third component is where women have the advantage: A higher proportion of women are enrolled in employer pension plans – at 40%, compared to 36% for men. Importantly, almost three-quarters of women in pension plans are enrolled in defined-benefit pension plans, compared to less than two-thirds of men. The tremendous advantage of defined-benefit plans is that the benefits are guaranteed, (and therefore not dependent on market performance), and usually indexed to inflation.

The final component is the amount of assets set aside by individuals for retirement, whether in tax-sheltered plans such as Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs), as well as in other assets such as real estate, inheritances, or ownership of a business. This final component is where women’s superior investment performance comes into play. Making and adhering to long-term plans is known to be the key to investment success, and we know that women outdo men in this area.

What is my advice for women contemplating retirement? Knowledge is power. First, take stock of your financial situation and second, learn which steps you can take to improve it.

For many of us, planning to defer taking OAS and CPP until age 70 is a great first start. Some of us will draw down our RRSPs before age 70 to take advantage of lower tax rates and bridge the earnings gap before we receive OAS and CPP.

For women (and men), consider taking a course to learn about finances and investing. A well-rounded course can give you valuable information to make good financial decisions, but perhaps more importantly, it can help you eliminate undue financial stress so that you can focus on enjoying your life now and in the many years ahead.


My next investing workshop at the University of Toronto is coming up on April 22nd for those of you who are interested.