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By Anna Prime — Published June 12, 2018
When discussing disparity in the work place, people usually focus on the topic of pay. It is still true that on average, there is a gender pay gap of around 10%-20% in the western world however what people do not tend to know, is that the gender pension gap is what should concern us more.
Studies show that on the whole, gender disparity in terms of retirement and pension is centered mainly around lack of savings. The estimated pension gap is between 30%-40% and in Europe it can reach as great at 49%.
Why is This the Case?
One reason for this is simply mother nature. It is widely known that women tend to live longer than men and therefore need their money to stretch over a larger number of years. Statistics show that women alive at 62 can expect to live as long as 90 and often, women do not plan for financial support for that amount of time.
Furthermore, women are more likely to live alone due to widowhood. Shocking figures show that only 15% or women over the age of 85 are married which has a huge financial impact on their savings. A common myth is that the death of a spouse can reduce living costs by 50%. Unfortunately, this is not the case and more often than not it is more expensive to live alone due to higher taxes and other impending factors.
In addition, on average, women have a shorter working life than men. Women tend to work for roughly 12 years less than men due to taking on the role of stay-at-home moms. Women also earn less in their overall adult working life due to taking time off for maternity leave resulting in overall earnings and savings being significantly lower. Furthermore, because they are almost twice as likely to take on part time work, they have lower pension benefits.
Lastly, be it for their spouse, child, friend or neighbor, women are also more likely to be care givers in old age which often comes as a financial price in place of professional care givers.
Of course, it would be unfair to blame the pension disparity on biology alone. Women are still earning less equal pay for equal work meaning that there is less money available to save for the future.
What Can be Done to Guarantee that Women's Pensions Keep Them Secure?
1. Women should not be afraid to ask for a higher wage.
2. Couples can invest in a spousal RRSP which will help them to equalize their savings.
3. We can understand that there are differences in the way that men and women live their lives and plan accordingly. Retirement system providers should teach men and women to strategize in different ways to secure their future.
4. Women should be encouraged to invest in riskier assets like stocks. Women tend to fear the unknown more than men which is why they tend to gravitate towards safer, low return options such as bonds.
The Bottom Line:
There is definitely a shift occurring in financial control and women are more likely to seek professional advice then men about how to save/ invest their money by seeing a financial advisor, reading books or seeking online advise. Financial advisers and officers report that whereas once the husband would take control of financial conversations, the number of women who seem to take the lead has dramatically increased. All in all, closing the gender pension gap will require combined forces from employees, employers and governments alike. We must learn from previous generations of pension receivers to ensure that the disparity in pension earnings between men and women diminishes and eventually disappears.