Understanding the Gender Pay Gap and Its Impact on Women’s Retirement
84 cents – what women make for every dollar a man makes, comparing median hourly wages globally.
The gender pay gap is a reality that continues to affect women’s financial well-being throughout their lives, especially when it comes to retirement. On average, women earn just 84 cents for every dollar a man makes, and in Canada, we’re currently ranked 52nd in wage equality, according to the 2023 Global Gender Gap Report. According to the report, Canada still has significant progress in achieving wage equality. In British Columbia, for example, the pay gap is even more pronounced at 17%, one of the largest in the country. These gaps don’t just mean smaller paychecks—they add up over time, impacting everything from daily expenses to how much we can save for the future.
The effects of the gender pay gap are far-reaching. Women face financial challenges from a young age at every stage of life. Even at their first summer job, statistics show that women are making a $3 per hour difference, and this gap continues to widen throughout their careers. Not only are women making less money, but the reality is that many women step out of the workforce to care for their families, so they have less time to earn money. The result – on average, women are set up to retire with about 80% of what men do. To top it all off, women tend to outlive men. So, we’re expected to make less money last longer—how does that make sense?
Thankfully, steps are being taken to address this. As of November 1, 2023, British Columbia introduced the Pay Transparency Act, requiring provincially regulated employers to include pay information in all job postings. This is a move in the right direction, as greater transparency is a key step toward closing the wage gap. But while systemic change is slow, we must take action right now to position ourselves for financial success.
Steps Women Can Take to Combat the Gender Pay Gap
Negotiate Salary and Benefits: Always negotiate your salary, whether you’re starting a new job or discussing a raise. Come prepared with market data to support your case, and don’t hesitate to ask for what you deserve. The long-term benefits of salary negotiations can make a significant difference over time.
Create a Strong Financial Plan: A well-structured financial plan that includes budgeting, saving, investing, and retirement planning can help manage income disparities and build long-term wealth. Remember, your financial plan should evolve as circumstances change, so an annual review and progress tracking are essential.
Pursue Professional Development: Continually investing in your skills and education helps you stay competitive in your field. Earning certifications, attending workshops, or even pursuing higher education can open doors to higher-paying roles and promotions, helping close the wage gap.
Leverage Mentors and Networks: You’re the average of the five people you surround yourself with. Building a strong support system through mentorship and professional networking can provide invaluable career advice, help you advocate for raises, and introduce you to new opportunities.
Seek Transparent Employers: Look for companies prioritizing pay transparency and equitable compensation practices. Employers with clear salary structures are often more committed to fairness and are a better choice for career growth.
Consider Career Transitions: If you feel undervalued in your current role or industry, it might be time to explore opportunities in higher-paying fields. Don’t be afraid to transition if needed.
Plan for Career Breaks: Plan ahead if caregiving or other life responsibilities lead to a career break. Keep industry contacts, continue your education, and explore flexible work options to make it easier to return to the workforce when you’re ready.
Advocate for Equal Pay and Policy Change: Get involved in pushing for legislative reforms and supporting candidates or initiatives prioritizing gender pay equity. Whether it’s advocating for pay transparency laws, affordable childcare, or paid family leave, your voice can help create systemic changes that benefit all women.
In the end, the gender pay gap isn’t just a statistic—it’s something that impacts every stage of a woman’s life, from her first paycheck to her retirement savings. It’s frustrating to think we’re expected to make less money last longer, especially when we’ve worked just as hard. While promising changes are happening, like B.C.’s Pay Transparency Act, it’s clear that the road to true wage equality is long.
But that doesn’t mean we have to wait. By taking control of our financial planning, negotiating for fair pay, seeking out supportive employers, and staying involved in the fight for equal pay, we can start to close the gap on our terms. It’s about being proactive and setting ourselves up for a secure and comfortable future. After all, we deserve nothing less.
Sources:
Head to head: Are employers making progress on the gender pay gap? | Benefits Canada.com
Gender Pay Gap in Canada | Canadian Women’s Foundation
Pay Equity in Canada: Closing the Pay Gap in Ontario and BC | LinkedIn
This information has been prepared by Lisa Carter, CFP®, CLU®, CIM® who is a Wealth Advisor and Financial Planner for Westmount Wealth Management Inc. and an Insurance Advisor for Westmount Wealth Planning Inc. Westmount Wealth Management Inc. is registered as a Portfolio Manager in British Columbia, Alberta, and Ontario. Westmount Wealth Planning Inc. is a subsidiary of Westmount Wealth Management Inc.
This material is distributed for informational purposes only and is not intended to provide personalized legal, accounting, tax, or specific investment advice. Please speak to a Westmount Wealth Advisor regarding your unique situation.
