Canadian analysis shows women have significantly less workplace savings despite living longer
Canadian women are approaching retirement with significantly less in workplace savings than men, despite living longer and facing more years in poor health, according to new research.
Women retire with an average of $164,000 in workplace savings plans, compared with $225,000 for men.
Women also live to age 87 on average, versus 84 for men, and spend 24% more of their lives in poor health.
“Canadian women face a retirement security challenge that is multilayered. Women retire with 27% less in savings than men—yet live approximately three years longer…meaning they must stretch fewer resources across more years,” says Sun Life, which did the analysis, based on a survey of 1,981 workplace plan members,.
Canadians now believe they need an average of $1.7 million to retire comfortably, but more than one‑third doubt they will reach that goal, according to a previous report from the BMO Financial Group.
Underutilised employer matches
The Sun Life analysis finds that women systematically underutilise workplace savings plans across income levels and career stages, particularly employer-matching contributions that can materially boost retirement outcomes.
“For nearly every plan metric, regardless of household income level, career stage or age, women take less advantage of their employer’s matching contributions than men,” the insurer says, concluding that “women are leaving money on the table…this is a retirement security gap that compounds over time.”
Among households earning under $70,000, 30% of women surveyed maximise their employer match compared with 40% of men. At incomes of $200,000 and above, 45% of women maximise their match versus 57% of men. Gaps also appear in the share of members receiving any employer match, reaching 16 percentage points at the highest income level.
By age, the widest gap is among respondents aged 35 to 44, where 39% of women maximise their employer match compared with 57% of men – an 18‑percentage‑point difference during prime career‑building years.
Earner status and tenure do not close the gap
The Sun Life report indicates that household earner status does not fully explain the disparity. Among secondary earners, women contribute 2.5% less of their income to workplace plans than men in similar roles. Women who are primary earners still contribute 2.1% less than male primary earners. Sole earners show a 1.3% contribution gap, while equal earners (each contributing 45%–55% of household income) show a 0.1% gap.
An analysis of tenure shows that gender gaps in plan utilisation persist across careers. The contribution rate gap ranges from 1.4 percentage points for members with less than two years in their workplace plan to 4.2 points for those with 21 to 30 years of service. Match maximisation gaps narrow over time – from 14 percentage points for those with fewer than two years of plan experience to two points at 21 to 30 years – but do not disappear.
Sun Life notes that target date funds, a common default investment, are structured to provide higher equity exposure earlier in careers, saying women “have missed the critical early accumulation years when compounding has the greatest impact.”
Sun Life attributes much of the gap to a “confidence factor” when it comes fo financial literacy: “If confidence is the barrier rather than knowledge, interventions that build confidence—rather than simply educate—may be the key to closing the gap,” Sun Life concludes.
Rising prices are shaking Canadians’ confidence in their ability to retire comfortably and pushing many to dial back on long‑term saving, according to a previous report.
How can employers help?
According to global benefits company Benefex, too many retirement saving schemes seem “overly complicated”.
“They appear [to be] too much of [a] hassle and are continually postponed to ‘another day’. We tend to ignore making decisions in areas where we don’t feel confident,” says the company in an article posted on its website.
That’s where employers play a critical role.
“In changing the conversation and engaging employees, the most important participant is the employer,” says Benefex. “Studies have shown that people look to their employers to give them the right information and are more trusting of employers than banks or the pension savings providers.”
