Women feel significantly less confident in their financial skills compared to men. Yet…
The results of a Léger survey published at the beginning of March jointly by the Chamber of Financial Security and ÉducÉpargne indicate that more women mention that their employment income was insufficient to save for retirement compared to men (30 %, compared to 20%). Even with equal pay, 21% of Quebec women fail to do so, compared to 16% among men, with a difference particularly felt in the income bracket of $50,000 to $74,999 (22%, compared to 13%). . Among people living as a couple, many more men report having more savings than their partner (41%, compared to 28%).
Obviously, the pay differential has something to do with it. From statistic to statistic, this pay gap is verified year after year even if it is decreasing, largely helped by government transfers. According to data from the Institute of Statistics of Quebec, the average hourly remuneration of women aged 15 and over was 10% below that of men in 2022. This gap, however, widens to 19% when average weekly remuneration is taken into account. account, also reflecting in particular family responsibilities and the number of hours worked.
This differential could reach 20% when the median after-tax income is considered. And if we exclude taxes and transfers from the calculation, the so-called market median income showed a gap of 36% in 2021. For households, the difference in income depending on whether the main earner is a woman or a man increases from 26% depending on after-tax income to 34% depending on market income.
The effect on the ability to accumulate retirement assets is therefore direct, if only on the ability to generate savings, but also on the right to contribute to a registered retirement savings plan, calculated based on the lesser of 18% of taxable earned income and an annual contribution limit. The same is true of benefits from the Quebec Pension Plan, a difference attributable mainly to pay gaps and the more frequent withdrawals of women from the labor market.
Generational contrasts
Do the coming years hold out promise of a gap narrowing at an accelerated rate, or even disappearing? Last June, a survey published by the human resources consulting firm ADP Canada asked respondents about the impact of salary gaps. A generational contrast emerged from the survey, suggesting that the next generation of workers may be more affected by what ADP calls a “wage inequality quit effect.” “More than two-thirds of Gen Z (63 percent) and 53 percent of millennials said they would leave their jobs if there was a gender pay gap, compared to just 37 percent of Gen X and 32 percent. among baby boomers. »
Another phenomenon to watch is that a new generation is preparing for the largest transfer of wealth in the country. “By 2028, Canadian women will control assets totaling $4 trillion [4000 milliards de dollars]. This is almost double what they hold to date, or $2.2 trillion,” Sun Life points out in an email.
“A groundswell continues to swell. It will have surged by 2026. In Canada, astronomical sums, of the order of 1000 billion dollars, will soon be bequeathed by baby boomers to their heirs of generations X and Y. The transfer of wealth promises to be favorable to gender equity. By 2026, Canadian women are expected to inherit $900 billion, which for the first time would put them at the head of almost half of the country’s accumulated assets,” we read in the CPA magazine. Manulife Private Management adds: “In Canada, it is estimated that by 2026, female savers will directly control almost half of total personal wealth, because the number of single, divorced or widowed women continues to increase and baby boomer women always live longer than their spouse. » According to the estimates used, around 70% of this inheritance will take the form of financial assets.
Lack of confidence
However, in the Chamber of Financial Security survey, it is said that generally, women seem less confident in their ability to manage their money than men. However… Aren’t they omnipresent in budget management? They drive 80% of spending and influence nearly 90% of household purchasing decisions. And in terms of financial asset management, are the studies borrowing from behavioral finance published over the years not intended to be conclusive? So :
– Women are less speculative when it comes to investments. This better risk management translates into more regular returns and would explain why, in the long term, they have achieved stock market gains of 1.5 to 2% higher than those of men;
– They perceive and fear more investment risks. They tend to be less optimistic and not err on the side of overconfidence;
– More rational in their financial behavior, they seek safer products. This results in more conservative asset allocations, with a lower proportion of portfolios devoted to equities. When choosing stocks, they will favor top quality securities and long-term investments. For their part, men are more easily tempted by riskier financial products in the hope of a quick profit;
– They keep their titles longer. It has been shown that a low level of investment turnover provides better returns and generates fewer transaction costs.