“The first problem for all of us, men and women, is not to learn but to unlearn.” – Gloria Steinem

Social change and gender equality legislation have gone a long way towards evening the playing field for women in terms of career opportunities and increased independence but recent statistical evidence suggests that when it comes to finances, the gap between men and women may be widening rather than narrowing. This is a complex issue that goes much deeper than the question of “equal pay for equal work” and that is rooted in five key areas. The first three of these areas are:

Women live longer

Statistically women live, on average, four years longer than men. Currently, the average life expectancy for children born in 2012 in 84 for girls and 80 for boys. This gap continues as we age; the average life expectancy of a Canadian aged 65 in 2012 in 83 for men and 86 for women. This increased lifespan coupled with the fact that women often marry men who are older than they are means that women are likely to spend their last years alone. Recent data suggests that the average age for a woman to be widowed in Canada is 56 and that 45% of women over 65 are widowed (compared to only 14% of men).

Covering all the household expenses alone rather than as a couple can make a dramatic difference to a senior’s ability to live comfortably in retirement. Too often, couples base their plans for retirement income on what they need as a couple but don’t plan for the fact that one partner might be living alone for many years and that those income needs might change. When you combine the rates of early widowhood with the costs of living well into old age becomes easy to see why 75% of single low-income seniors in Canada are women.

Women earn less

Men tend to have higher-paying jobs than women and this is largely due to the types of roles that they are employed in. Only 25% of dual-income households in Canada report that the highest income earner is female and this is backed up by other reports, including one from2004that showed76% of the Canadians who earned more than $89,000 that year were men. Even when two people of the opposite sex are in the same role, men often get paid more simply because they have higher salary expectations and are willing to negotiate harder. The consequence of this is that, on average, women who are working full-time earn 23% less than men who work full-time making them less able to accumulate assets and build wealth than their male counterparts.

A recent study estimated the average lifetime earnings for men at $803,000 compared to an average of $519,600 for women and it’s not surprising that this results in women entering retirement with a smaller amount of savings. This retirement gap between men and women is widened further by the fact that women are more likely to work part-time in roles that have lower wages and are less likely to have access to workplace savings programs that help boost their retirement savings. According to a 2009 report, 70% of Canadians who work part-time are women and they account for 66% of the Canadians earning minimum wage. These numbers are concerning, not only because a lower earnings rate means a smaller amount of retirement savings for women but also because their reduced earnings result in a lower amount of CPP benefit and their longer lifespan means that they need to make a smaller amount of income last over a greater number of years. This makes it critically important for women to save as much as they can for retirement, especially in their early working years when there is time for compounding to work its magic, and why we need to educate our children on the importance of starting the saving habit early.

Women take time off to raise children

Even though 67% of women with children under 5 are working (2012, Stats Canada), a report by the Canadian Labour Congress suggests that “giving birth to child lowers the future earnings rate of a Canadian mother compared to a comparable woman without children by 5-13% “.Whether this drop is due to maternity leave, moving from a full-time role to a part-time role or making a career change to a less demanding (and lower-paid) job after having kids, there is no doubt that raising a family has an impact on the earning capacity of women. This is especially true in the case of single mothers who often find it incredibly hard to save anything for their retirement while they are raising their children. When you consider that 80% of lone parent households in Canada are headed by women it’s not surprising that there are so many women in their 50s and 60s who are trying to “catch up” on their retirement savings now that their children are grown.

There is no “one size fits all” solution to this problem surrounding women, money, and retirement. In a nutshell, low earning rates lead to low savings rates (and low CPP contribution rates) which lead to low income in retirement but the reasons for the earnings gap between women and men are complex and have roots in other social and family issues that cannot be addressed by gender equality and equal pay legislation alone. Couples need to plan for the needs of both spouses for as long as retirement lasts for the survivor and women must take into account the fact that they need to do what they can to earn more, save more and build more in order to secure their financial future.