retirement - Sun Life Financial
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T N E M E R I T E R
WORKPLACE SAVINGS PLANS can help shrink the gap between unretirement and retirement readiness, while also providing significant emotional and financial benefits for members compared to non-members.
Life’s brighter under the sun
What is “unretirement”?
The gender gap in retirement savings Our seventh annual Canadian Unretirement Index survey – which tracks how workers’ attitudes and expectations about retirement are evolving in response to economic, health and personal forces affecting their lives – revealed some head-turning results along gender lines. While the answers to many questions were similar for men and women, there were significant differences in some areas – and the answers women gave reveal a significant gap between their retirement savings experience and that of men. As more women enter the workforce and become primary breadwinners in their families, the Unretirement Index results show how crucial it is that more retirement savings advocacy be targeted at women’s specific financial needs for the future.
GENDER GAP
2
The term refers to the growing trend away from early retirement – by choice or economic necessity – and towards continued work past the traditional retirement age of 65.
“…of the employees not taking advantage of employer matching contributions, two thirds of them were women.”
G S AV I N
S
The WANT to vs. NEED to gap
GAP
44% The savings gap Retirement readiness is one overarching difference between men and women – as shown by several measures in our survey. Of the individuals who said they expected to be working past age 65, 62% of women said they would be working because they needed to, not because they wanted to, versus 56% of men. It’s clear that many women don’t feel they have a choice when it comes to working past age 65 – financial necessity demands it. This lack of choice may relate to how much women manage to save for retirement. The survey showed that 35% of women were “somewhat” or “very” dissatisfied with their retirement savings as opposed to just 29% of men. And only 23% of women surveyed said they plan to save $500,000 or more by retirement age compared to 30% of men.
38%
WANT to keep working after age 65
56 %
62%
NEED to keep working after age 65 3
These results correspond with a detailed analysis of Canadian capital accumulation plans that we undertook in 2014 that produced some startling numbers: men have average and median retirement savings balances that are 40% to 45% higher than those of women – and average and median contributions that are 31% to 49% higher1. A separate payroll study we did showed that of the employees not taking advantage of employer matching contributions, two thirds of them were women.
Average annual contributions by gender
P L A N ME MB E R S
Account balance $5,610 $3,775 AVERAGE
AVERAGE ACCOUNT BALANCE BY GENDER AND ACCOUNT GROWTH
AVERAGE ACCOUNT BALANCE BY GENDER AND ACCOUNT GROWTH $80,000
13%
$70,000
4%
$60,000 $50,000
6%
$40,000
11%
9%
16%
$3,400
$2,590
$4,600 $3,365
$3,140 $2,245
MEDIAN Although the average account balance for males is consi higher than females, the account balance for females is P L A Ngrowing SP ONSOR S at a slightly faster rate than their male counterp Year over Year Growth: AVERAGE Males Females 2011 4% 6% 2012 9% 11% MEDIAN 2013 13% 16% TOTA L A N N U A L CO N T RI B U T I O N S
2013
2012
2011
2010
2013
2012
2011
$20,000
2010
$30,000
$10,000 $-
GENDE
R
G S AV I N 4
1 Data was drawn from Sun Life Financial’s CAP Universe of over 5,200 of theplan industry, male account are plans andRegardless more than 1,000,000 members. It represents thebalances largest repository of this type of higher information in Canada. consistently than their female coworkers although
in the Telecom Services industry, they are within $1,000 of each other.
GAP
S
Lack of tools and knowlege in financial decision making
Factors influencing the savings gap A key factor in why women are saving less than men is that their average wage continues to be much lower, about 70% of male full-time wages.2 Women are also more likely to be single parents (with potentially lower access to resources), with 8 in 10 lone-parent families (nearly 13% of all families in Canada) being female-led.3 But another factor that came to light in the survey was the importance of having the tools and knowledge to make good financial decisions. When asked if they had sufficient financial knowledge to make a plan to retire, only 41% of women replied “yes” in comparison to 54% of men. And when asked what specific retirement planning areas they lacked knowledge in, the top results were as shown here: These results show how crucial it is for women to gain the tools to take control of their own financial futures. This is especially important when you factor in Canadian government estimates that almost 41% of marriages will end in divorce before a couple’s 30th wedding anniversary, often leading to expensive splitting of assets.4 More than ever, both sexes need to have solid retirement plans in place.
•
46% of women say they lack
sufficient knowledge about how much retirement income they would need (versus 37% for men)
41% of women say they lack
•
sufficient knowledge about how taxes affect retirement savings/ income (versus 32% for men)
•
35% of women say they lack
sufficient knowledge about how to select investments (versus 26% for men)
•
32% of women say they lack
sufficient knowledge about government programs (CPP/QPP, OAS etc.) versus 24% for men.
2 Source: Statistics Canada, CANSIM, table 202-0102. Average earnings by sex and work pattern. 3 Source: Statistics Canada http://www12.statcan.ca/census-recensement/2011/as-sa/98-312-x/98-312-x2011001-eng.cfm. 4 Source: Employment and Social Development Canada http://www4.hrsdc.gc.ca/[email protected]?iid=76
5
The times are changing Women’s place in the workforce has changed dramatically over the past 40 years. While in 1976, just 8.5% of opposite sex couples had a female spouse with the higher income, by 2010, that number had risen to more than 31%.5 And according to Statistics Canada, the 8.1 million women working in 2009 (58.3% of women) were more than double the number of women employed in 1976.6 And as of 2011, more than 59% of all university degree holders aged 25 to 34 were women.7 More than ever, women are becoming central breadwinners in their families, and their financial needs and attitudes are changing along with that. Women’s financial needs are also different from men’s. They are looking for more financial security, for example. While 70% of men said guaranteed income in retirement was very important to them, 79% of women wanted that guarantee that they’ll have steady income when they retire. And women are more skeptical about receiving retirement income from government sources. While 76% of men were “somewhat” or “very” confident that they will continue to receive a government pension at today’s levels, only 68% of women believed that they could count on government sources.
6
Bridging the gap through financial literacy Being conscious of the difference between women’s and men’s habits and attitudes towards retirement saving is becoming more crucial for plan sponsors. And empowering women with financial knowledge through plan member education can go a long way towards closing the savings gap. We can help – through an assessment of your plan’s needs and education programs to match. Our my money @ work program offers a comprehensive set of tools and information to help plan members secure a financially fit future. Other tools for our plan members such as money UP! – our game-inspired approach to financial literacy – or our face-to-face learning sessions, can help increase plan member education and engagement. Being proactive now will help all plan members, regardless of gender, prepare for a better and more secure financial future.
5 Source: Statistics Canada CANSIM data base, as shown here http://www.canadianbusiness.com/ economy/canadas-female-breadwinners/ 6 http://www.statcan.gc.ca/pub/89-503-x/2010001/article/11387-eng.htm 7 http://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-012-x/99-012-x2011001-eng.cfm
IN G D I R B
G
P THE GA
The continuing power of workplace plans Once again, the Unretirement Index results show how participation in workplace savings plans contributes to better financial health and retirement readiness for plan members compared to non-members. Here are just a few results: • H igher financial knowledge: 52% of plan members say they have enough financial knowledge to make a plan for retirement compared to 38% of non-members. • G reater savings: When asked how satisfied they were with how much they have saved for retirement, 55% of plan members were “somewhat” or “very” satisfied compared to just 26% of non-members. • Earlier retirement: While just 16% of Canadians without a workplace retirement savings plan say they will be retired by age 66, the number of workplace retirement savings plan members who plan to retire “on time” is double that, 32%. • W ork by choice: Of those who say they will be working at age 66, 45% of plan members say it will be because they want to (not because of financial need) versus just 32% of non-members.
Workplace savings results for plan members
52%
say they have enough financial knowledge to make a plan for retirement
55 %
were “somewhat” or “very” satisfied with how much they have saved for retirement
32%
plan to retire “on time” vs. 16% of those without a retirement savings plan
45 %
say they will be working at age 66 because they want to
7
About the survey The seventh Sun Life Canadian Unretirement Index is based on the findings of an Ipsos Reid poll, conducted between December 5 and 22, 2014, on behalf of Sun Life Financial. For this survey, Ipsos Reid conducted online interviews with a sample of 3,000 working Canadians from 30 to 65 years of age from Ipsos’ online panel. An additional sample of 400 retired Canadians over age 65 was collected. Weighting was employed to balance demographics to ensure that each sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online surveys is measured using a credibility interval. In this case, the survey is accurate to within +/- 2.0 percentage points had all Canadian adults been polled for the core sample of 3,000 and +/-5.6 percentage points for the booster sample of 400. All sample surveys and polls may be subject to other sources of error, including, but not limited to methodological change, coverage error and measurement error.
Life’s brighter under the sun Group Retirement Services are provided by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. GRP1885-E 06-15-si-an
T N E M E R I T E R
WORKPLACE SAVINGS PLANS can help shrink the gap between unretirement and retirement readiness, while also providing significant emotional and financial benefits for members compared to non-members.
Life’s brighter under the sun
What is “unretirement”?
The gender gap in retirement savings Our seventh annual Canadian Unretirement Index survey – which tracks how workers’ attitudes and expectations about retirement are evolving in response to economic, health and personal forces affecting their lives – revealed some head-turning results along gender lines. While the answers to many questions were similar for men and women, there were significant differences in some areas – and the answers women gave reveal a significant gap between their retirement savings experience and that of men. As more women enter the workforce and become primary breadwinners in their families, the Unretirement Index results show how crucial it is that more retirement savings advocacy be targeted at women’s specific financial needs for the future.
GENDER GAP
2
The term refers to the growing trend away from early retirement – by choice or economic necessity – and towards continued work past the traditional retirement age of 65.
“…of the employees not taking advantage of employer matching contributions, two thirds of them were women.”
G S AV I N
S
The WANT to vs. NEED to gap
GAP
44% The savings gap Retirement readiness is one overarching difference between men and women – as shown by several measures in our survey. Of the individuals who said they expected to be working past age 65, 62% of women said they would be working because they needed to, not because they wanted to, versus 56% of men. It’s clear that many women don’t feel they have a choice when it comes to working past age 65 – financial necessity demands it. This lack of choice may relate to how much women manage to save for retirement. The survey showed that 35% of women were “somewhat” or “very” dissatisfied with their retirement savings as opposed to just 29% of men. And only 23% of women surveyed said they plan to save $500,000 or more by retirement age compared to 30% of men.
38%
WANT to keep working after age 65
56 %
62%
NEED to keep working after age 65 3
These results correspond with a detailed analysis of Canadian capital accumulation plans that we undertook in 2014 that produced some startling numbers: men have average and median retirement savings balances that are 40% to 45% higher than those of women – and average and median contributions that are 31% to 49% higher1. A separate payroll study we did showed that of the employees not taking advantage of employer matching contributions, two thirds of them were women.
Average annual contributions by gender
P L A N ME MB E R S
Account balance $5,610 $3,775 AVERAGE
AVERAGE ACCOUNT BALANCE BY GENDER AND ACCOUNT GROWTH
AVERAGE ACCOUNT BALANCE BY GENDER AND ACCOUNT GROWTH $80,000
13%
$70,000
4%
$60,000 $50,000
6%
$40,000
11%
9%
16%
$3,400
$2,590
$4,600 $3,365
$3,140 $2,245
MEDIAN Although the average account balance for males is consi higher than females, the account balance for females is P L A Ngrowing SP ONSOR S at a slightly faster rate than their male counterp Year over Year Growth: AVERAGE Males Females 2011 4% 6% 2012 9% 11% MEDIAN 2013 13% 16% TOTA L A N N U A L CO N T RI B U T I O N S
2013
2012
2011
2010
2013
2012
2011
$20,000
2010
$30,000
$10,000 $-
GENDE
R
G S AV I N 4
1 Data was drawn from Sun Life Financial’s CAP Universe of over 5,200 of theplan industry, male account are plans andRegardless more than 1,000,000 members. It represents thebalances largest repository of this type of higher information in Canada. consistently than their female coworkers although
in the Telecom Services industry, they are within $1,000 of each other.
GAP
S
Lack of tools and knowlege in financial decision making
Factors influencing the savings gap A key factor in why women are saving less than men is that their average wage continues to be much lower, about 70% of male full-time wages.2 Women are also more likely to be single parents (with potentially lower access to resources), with 8 in 10 lone-parent families (nearly 13% of all families in Canada) being female-led.3 But another factor that came to light in the survey was the importance of having the tools and knowledge to make good financial decisions. When asked if they had sufficient financial knowledge to make a plan to retire, only 41% of women replied “yes” in comparison to 54% of men. And when asked what specific retirement planning areas they lacked knowledge in, the top results were as shown here: These results show how crucial it is for women to gain the tools to take control of their own financial futures. This is especially important when you factor in Canadian government estimates that almost 41% of marriages will end in divorce before a couple’s 30th wedding anniversary, often leading to expensive splitting of assets.4 More than ever, both sexes need to have solid retirement plans in place.
•
46% of women say they lack
sufficient knowledge about how much retirement income they would need (versus 37% for men)
41% of women say they lack
•
sufficient knowledge about how taxes affect retirement savings/ income (versus 32% for men)
•
35% of women say they lack
sufficient knowledge about how to select investments (versus 26% for men)
•
32% of women say they lack
sufficient knowledge about government programs (CPP/QPP, OAS etc.) versus 24% for men.
2 Source: Statistics Canada, CANSIM, table 202-0102. Average earnings by sex and work pattern. 3 Source: Statistics Canada http://www12.statcan.ca/census-recensement/2011/as-sa/98-312-x/98-312-x2011001-eng.cfm. 4 Source: Employment and Social Development Canada http://www4.hrsdc.gc.ca/[email protected]?iid=76
5
The times are changing Women’s place in the workforce has changed dramatically over the past 40 years. While in 1976, just 8.5% of opposite sex couples had a female spouse with the higher income, by 2010, that number had risen to more than 31%.5 And according to Statistics Canada, the 8.1 million women working in 2009 (58.3% of women) were more than double the number of women employed in 1976.6 And as of 2011, more than 59% of all university degree holders aged 25 to 34 were women.7 More than ever, women are becoming central breadwinners in their families, and their financial needs and attitudes are changing along with that. Women’s financial needs are also different from men’s. They are looking for more financial security, for example. While 70% of men said guaranteed income in retirement was very important to them, 79% of women wanted that guarantee that they’ll have steady income when they retire. And women are more skeptical about receiving retirement income from government sources. While 76% of men were “somewhat” or “very” confident that they will continue to receive a government pension at today’s levels, only 68% of women believed that they could count on government sources.
6
Bridging the gap through financial literacy Being conscious of the difference between women’s and men’s habits and attitudes towards retirement saving is becoming more crucial for plan sponsors. And empowering women with financial knowledge through plan member education can go a long way towards closing the savings gap. We can help – through an assessment of your plan’s needs and education programs to match. Our my money @ work program offers a comprehensive set of tools and information to help plan members secure a financially fit future. Other tools for our plan members such as money UP! – our game-inspired approach to financial literacy – or our face-to-face learning sessions, can help increase plan member education and engagement. Being proactive now will help all plan members, regardless of gender, prepare for a better and more secure financial future.
5 Source: Statistics Canada CANSIM data base, as shown here http://www.canadianbusiness.com/ economy/canadas-female-breadwinners/ 6 http://www.statcan.gc.ca/pub/89-503-x/2010001/article/11387-eng.htm 7 http://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-012-x/99-012-x2011001-eng.cfm
IN G D I R B
G
P THE GA
The continuing power of workplace plans Once again, the Unretirement Index results show how participation in workplace savings plans contributes to better financial health and retirement readiness for plan members compared to non-members. Here are just a few results: • H igher financial knowledge: 52% of plan members say they have enough financial knowledge to make a plan for retirement compared to 38% of non-members. • G reater savings: When asked how satisfied they were with how much they have saved for retirement, 55% of plan members were “somewhat” or “very” satisfied compared to just 26% of non-members. • Earlier retirement: While just 16% of Canadians without a workplace retirement savings plan say they will be retired by age 66, the number of workplace retirement savings plan members who plan to retire “on time” is double that, 32%. • W ork by choice: Of those who say they will be working at age 66, 45% of plan members say it will be because they want to (not because of financial need) versus just 32% of non-members.
Workplace savings results for plan members
52%
say they have enough financial knowledge to make a plan for retirement
55 %
were “somewhat” or “very” satisfied with how much they have saved for retirement
32%
plan to retire “on time” vs. 16% of those without a retirement savings plan
45 %
say they will be working at age 66 because they want to
7
About the survey The seventh Sun Life Canadian Unretirement Index is based on the findings of an Ipsos Reid poll, conducted between December 5 and 22, 2014, on behalf of Sun Life Financial. For this survey, Ipsos Reid conducted online interviews with a sample of 3,000 working Canadians from 30 to 65 years of age from Ipsos’ online panel. An additional sample of 400 retired Canadians over age 65 was collected. Weighting was employed to balance demographics to ensure that each sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online surveys is measured using a credibility interval. In this case, the survey is accurate to within +/- 2.0 percentage points had all Canadian adults been polled for the core sample of 3,000 and +/-5.6 percentage points for the booster sample of 400. All sample surveys and polls may be subject to other sources of error, including, but not limited to methodological change, coverage error and measurement error.
Life’s brighter under the sun Group Retirement Services are provided by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. GRP1885-E 06-15-si-an
