Planning for retirement is unique to everyone’s financial situation and goals, but women tend to face additional challenges that can interfere with their plans. Like so many women today, you may find yourself part of the sandwich generation, balancing raising children and caregiving for elderly parents while pursuing a career and other personal commitments. To add to the complexity, you may have to answer questions about your financial future on your own due to divorce or the death of your spouse or partner.

Some of the key reasons that women might need to plan differently for their retirement include:

  • Longevity: Canadian women enjoy a longer life, with an average life expectancy of 84 years versus 81 years for men.1 Women need to amass a larger nest egg to maintain their lifestyle over a longer retirement.  
  • The gender pay gap: In 2018, women aged 25 to 54 earned on average 13.3% less money than their male counterparts.2 Gender inequality in the workplace can be even more pronounced since women more often work in part-time, temporary and lower-wage jobs. 
  • Caregiving obligations: From tending young children to caring for aging parents, women are more likely to interrupt careers for family responsibilities. The “motherhood penalty” is estimated to cost women US$16,000 annually in lost wages.3 That can reduce their long-term savings and retirement income. 
  • Being single: A third of women aged 65 years and over live by themselves whether by choice or after the death of a spouse or partner.4 That increases their need for formal care, housing and finances. Being single often means having sole responsibility for their financial future.  

These factors mean it's even more important for women to have a sound retirement plan with long-term goals. Here are four key steps you can take to help ensure you enjoy retirement on your terms. 

Step 1: Assess your situation

What your retirement will look like will reflect how you’ve saved for it. Where are you at with your savings currently and what amount do you need to reach to have the right retirement for you?

Take a complete look at what you have saved to help determine what options you will have in your retirement. 

  • Tally your accounts where you’ve been saving for retirement. Beyond your Registered Retirement Savings Account (RRSP), look at your other investments like your Tax Free Savings Account (TFSA) as well as any mutual funds, chequing accounts, and savings accounts. 
  • Appraise your real estate such as your principal home and your cottage property, if applicable. Don't forget other investments such as bonds or less liquid investments such as collections and vehicles. 
  • Add up income you are due to receive in retirement benefits, such as payments from the Canada Pension Plan (CPP) and Old Age Security (OAS), known collectively in the U.S. as social security benefits, as well as life insurance or other annuities. 
  • Determine your payouts from your employment pension if you have one. You may need to consult with your human resources department. 

Be sure you understand certain parameters ahead of time: the level of retirement income you receive can depend on the age at which you retire, the amount you invest, your rate of investment return and other factors. Speak with a Scotia Wealth Management relationship manager to pull everything together.  

Step 2: Define your purpose in retirement

Now that you've tallied your financial situation for your ‎‎ne‎‎st egg, you’ll need to match it with how you might want to spend your time. Retirement can be a tricky adjustment, but it’s important to envision a new purpose and routine to occupy your new-found freedom without a career. You want to ensure you can maintain the life you had before retirement and live out your dreams, never having to worry about becoming a burden to your loved ones. ‎ 

‎Think about these questions:

  • ‎Do you aspire to see the world, or would you prefer a quiet life close to family?  
  • Do you have another passion that you’d like to take up?  
  • What type of legacy would you like to leave to your family or a cause you’re passionate about? ‎ 
  • How soon do you plan to retire? The number of years until you retire will impact on how much you can add to your retirement savings before retirement age. If it's decades away, be aware that life expectancy continues to climb.  

Step 3: Break it down 

Planning for a retirement that spans 30 years or more can seem daunting. Start by preparing detailed plans in five-year increments. Your lifestyle is likely to change during retirement, and these shorter-term plans allow you to make gradual adjustments. You may be more active in your early retirement, while your later years may bring a greater need for healthcare support. 

For each stage of your retirement: 

  1. Determine a list of expenses. 
  2. Create a savings plan for how income will be pooled, like into a savings account, and allocated. You will receive CPP, OAS and may still earn income from securities investments or other sources such as real estate rentals. Consult the federal government's Canadian Retirement Income Calculator
  3. Set a hierarchy of income and savings sources so you know where to draw from first. You can work with a financial planner to determine the best order of drawdowns for income and tax reasons. 
  4. Establish an income amount per month from your sources to pay your expenses. Create a buffer for emergencies. Better yet, set aside an emergency fund at each level. It can be a bonus if untouched when moving to the next stage. 
  5. Boost savings. As you set your income levels in your five-year plans, it may become apparent your budgets are tight. This can serve as an alert to boost the amounts you save each month as you prepare years in advance. Start now. 
  6. Prepare to downsize. Be aware of the likely need to move to a smaller home and sell property at one or more stages. A cottage might not be something you want to upkeep later into your retirement. 
  7. Consider inflation. Pandemic-induced increases are expected to subside in 2022. But inflation still adds up over years, weakening the buying power of the cash you put away now. Ensure your investments beat inflation and that you make greater allocations for retirement spending like cruises and trips.  
  8. Align your retirement goals with your spouse or partner. There are also tax benefits for couples when considering their retirement income. Take advantage of a wage gap with income splitting: transferring some income to the spouse earning less to reduce tax owed.  
  9. Preserve independence. Establish investment funds in your own name for greater control of your assets, and in case of divorce or separation, this can be an especially crucial step.  
  10. Consult. Speak with financial professionals to oversee your plans. They can get you started on the right path, coach you along the way to help you achieve goals and to make necessary adjustments. Speak with a Scotia Wealth Management relationship manager to pull everything together.  

Step 4: Consider long-term plans 

When you join the ranks of retirees, you'll want to have a strong financial plan already in place. That means tackling long-term planning issues such as health care, life insurance, and estate planning. Some of these can be slotted into your five-year plans for updates, but you need to think about them now. 

Consider the benefits of life insurance for you and your spouse or partner, especially since women live longer on average than men. That can help if your spouse is the main earner. There are other insurance products to assess, such as disability insurance that will help preserve income in case of accident or illness, income that would have gone into retirement savings. 

Always have a Will done by a lawyer and include it in your five-year plans to update as your assets change. Try to ensure your estate planning is organized, the executor is appropriate and fair, and that any plans for a legacy are straightforward. 

Your health is likely to influence your retirement lifestyle decisions, but it is difficult to predict. You may want to budget an increasing emergency fund as you age. Sensory and cognitive changes and weakness may be subtle or severe. Falls, heart disease and difficulty with daily living activities are by no means universal but are common. For example, one in five Canadians lives with arthritis.5 Spending the winter in a warmer climate or moving to a home without stairs could be decisions to make before your health affects your lifestyle. 

Because women live longer, they’re more likely to need long-term care. Some two-thirds of Canadian seniors living with dementia are women.6 You may require specialized medical care that can come at an additional cost if your employer doesn’t offer lifelong health insurance, something that's increasingly rare in the private sector. Out-of-pocket expenses for long-term care services can quickly deplete retirement savings, making it imperative to plan for unforeseen health and care issues. 

To live well, plan well 

In terms of feeling ready for retirement, only 25% of women believe they’re adequately prepared.7 Yet only 22% of women have a formal financial plan prepared by a professional.8

A financial plan is like a roadmap designed to show you how you can achieve your goals. It’s never too early to plan for a comfortable retirement, but it can be too late. 

Start the conversation today with Scotia Wealth Management.  We can help you meet your unique needs with Total Wealth Planning. Together, we'll create the retirement you want and deserve – and give you valuable peace of mind about this important chapter in your life. 

Your top questions about retirement 

How do I begin to plan for my retirement? 

Begin your plans for retirement by assessing your financial situation and how it’s likely to develop with savings, investments and pensions. Then try to match it with what you intend to do in retirement. You’ll need to budget your post-work life in 5-year instalments and speak with a financial planner on how to organize your assets.  

How much do I need to live off per month? 

Your retirement marks a change in income and expenses. You may stop investing in RRSPs, TFSAs, pensions and even mortgages, but new expenses will emerge such as fresh passions, trips and cruises to occupy your new freedom, plus assisted living and supplementary health care as you age. It’s important to develop a plan that assesses your current situation, defines your goals, breaks your plan into manageable chunks and adds a long-term view. 

How do I find the best retirement account for me? 

Personal financial situations vary, retirement goals differ – everyone is unique. The best way to find a retirement account for you is to speak with a Scotia Wealth Management relationship manager. We can help you meet your needs with Total Wealth Planning. Together, we'll create the retirement you want and deserve – and give you valuable peace of mind.

How much does a single woman need to retire? 

There is no one answer here because it will depend on your individual situation and what a great retirement looks like to you. Being single can mean that you are solely responsibility for your financial future and your long-term plans in terms of housing etc. You will want to create a sound retirement plan that considers all of your long-term goals and maps out how you will achieve them. 


7. PMG Intelligence, Women & Investing, December 2019

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