Retirement gender gap persists: TD

(January 12, 2005) When it comes to investing, there are still significant differences between men and women, according to a survey by TD Waterhouse. Roughly the same percentage of men and women contribute to RRSPs — 79% and 77%, respectively — but that’s pretty much where the similarity ends.

“The overall impression from our poll findings is that women are more worried than men about their financial security in retirement, yet they are more disengaged from the process of investing and are less aggressive in taking the steps needed to achieve a comfortable retirement,” says Patricia Lovett-Reid, senior vice-president, TD Waterhouse Canada Inc. “Fewer women have taken even the first step, which is to properly calculate what income they will need when they are retired.”

According to the poll, 57% of women don’t know how much they will need to retire, compared to 42% of men, and only 41% of women have calculated what they will need, compared to 47% of men.

The survey suggests that women who have set a target tend to underestimate the amount of money they will need to fund a comfortable retirement. The average retirement nest-egg they have in mind is $627,000 — which is considerably higher than last year’s response of $399,000, but far behind the $797,000 that men have in mind.

“While women are closing the gap with men when it comes to assessing the size of the retirement nest-egg they will need, I am still concerned about how they are going to achieve their objectives,” says Lovett-Reid.

This difference in goals is reflected in both the amount they invest and how it is invested. Men are more likely than women to invest in stocks, mutual funds and income trusts, and they express more confidence in their ability to reach their goal.

The study also found women were making far smaller contributions than men. On average, women plan to contribute $3,450 this year, just 56% of the $6,130 men said they would contribute.

While women are investing smaller amounts, they may be investing smarter. The TD Waterhouse poll does not take into account the higher risk factors that male investors are taking on.

Women also show a stronger preference for professional advice, with 77% employing an advisor — compared to 64% of men — and nearly half said they were very satisfied with their advisor. Women are also more likely to make monthly contributions to their RRSP than men.

Women may also be more realistic about the challenges they will face in the future, with 62% of women concerned about the rising costs of healthcare, compared to 48% of men. And 57% are worried about privatization of healthcare, while only 43% of men share this concern.

“While our poll deals with attitudes, expectations and intentions rather than actual life experiences, the socio-economic implications are real indeed,” says Lovett-Reid. “According to Statistics Canada, almost four times as many single women over age 65 were living below the poverty line in Canada in 2002 than single men.

“If Canadians want to reduce the poverty gap between men and women in retirement, then somehow we have to find ways to provide more women with investment skills and confidence so that this gap can be closed forever.”

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

(01/12/05)