woman taking part in driving industry-wide change in investments and wealth management

Financial challenges women face

Tips on how to empower yourself

The future of wealth is female. Canadian women currently control $2.2 trillion of assets and that number is expected to grow. Yet, while women have made huge financial gains in recent years, inequities between men and women still exist, particularly when it comes to financial planning.

A 2018 national survey revealed that 38% of Canadian women admitted they know “very little” about finance and investment, while 28% indicated they are dependent on a partner or someone else to make ends make financially. Over half of all the women polled did not have a written financial plan.

Women experience the life journey much differently than men. Your wealth management firm – and your advisor – should understand your needs, preferences and behaviours as a female investor and offer strategic advice to meet them.

Here’s a look at some of the unique life circumstances women face:

Women live longer than men

If you’re a woman, odds are you’ll live longer than the average man. Not only that, according to Census Canada, the average age for widowhood in this country is 56, meaning many women will also experience a portion of retirement alone. For women who have envisioned retirement based on shared income, losing a spouse can also be devastating from a financial perspective. Planning for widowhood is a significant life transition that requires specialized financial planning and support.

Women earn less than men

The pay equity gap affects women throughout their lives and into retirement. In 2020, a woman in Canada earned 0.89 cents for every dollar a man earned. That’s equivalent to a $3.52 hourly wage rate gap (or 11 percent) between men and women and translates into lower overall savings. In fact, according to a 2021 report, women retire with 30 per cent less wealth than their male counterparts. On average, women experience a savings rate gap of nearly one per cent (0.81 per cent). This means they need to work two years longer than men to be financially prepared for retirement.

Women tend to be more conservative with their money.

Research shows that men are typically more confident than women when it comes to investing and taking risks with their money. This doesn’t mean women are more risk averse, rather they are risk aware. Women tend to focus on wealth in terms of security, rather than opportunity. While being a more conservative investor isn’t necessarily a bad thing, being too conservative may mean your money won’t get the returns you need to meet retirement or other long-term goals.

More women take on a caregiver role

Canada’s aging population coupled with a renewed spotlight on the realities of long-term care homes during the pandemic, means that many families may experience a greater financial burden when it comes to caregiving. Many women take on the responsibility of caring for aging or ill parents – in some cases stepping away from the workforce and missing on a smooth career trajectory, pay raises and retirement contributions. This situation can significantly impact their retirement plans, regardless of marital status.

Women tend to experience decline in lifestyle post-divorce   

Divorce isn’t easy for anyone but for women it can come with more financial challenges, particularly for those who haven’t been closely involved in family finances and who may have relied on their husbands for financial security. Already faced with an earnings gap issue, many women may have focused more on short-term financial priorities rather than building retirement assets. Rebuilding assets and adapting to an increased cost of living, not to mention court and legal fees, can mean having to rethink lifestyle and retirement decisions.  

Women tend to defer finances to their partner

Studies show that many women defer long-term financial decisions to their spouses, putting their own retirement savings at risk and leaving them ill-equipped for life without a partner. For many, a lack of financial literacy is to blame. According to Statistics Canada’s 2014 Canadian Financial Capability Survey, only 31 per cent of women considered themselves to be financially knowledgeable compared with 43 per cent of men.

3 steps to financial empowerment

On International Women’s Day and beyond, women can help advance gender parity by taking responsibility and making informed decisions about their financial future.

  1. Knowledge is power. The best way to make informed decisions about your money and your financial future is to educate yourself. Start by understanding foundational concepts like budgeting, emergency planning, managing your debt and investing. A great place to start is Canada’s financial literacy blog that outlines practical money management tips and money-related topics.
  2. Plan now for the future. “The most important thing we can do for ourselves to deal with transition, unexpected loss and unexpected life events, is to plan. And the sooner we have a plan in place, the better,” says Sarah Widmeyer, SVP, Wealth Strategies at Richardson Wealth. Key things to consider include organizing your documents, understanding your financial situation, and creating an estate plan that includes updating your will.
  3. Get the right financial advice. Working with an authentic advisor who you trust and who treats you as an individual with unique needs is crucial.

It’s so important to find an advisor who will listen to you, ask the right questions and create a tailored plan that gives you the peace of mind that you won’t run out of money now, or during retirement.,” says Sarah. “A good financial advisor will understand what you want to accomplish and will build a plan to help you achieve those goals.

Take action

Our advisors at Richardson Wealth want to help female clients like you grow your financial knowledge base and build confidence in your goals. If you would like to learn more about wealth strategies for women, visit our website and follow Richardson Wealth on LinkedIn for updates. 

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