With cohorts in the workforce behaving differently as they prepare for retirement, it’s important for plan sponsors to consider these differences along gender and generational lines.

At Benefits Canada’s 2019 Defined Contribution Investment Forum in Toronto on Sept. 27, Jean Young, senior research associate at the Vanguard Center for Investor Research, shared a survey that found women (60 per cent) are slightly more likely than men (58 per cent) to participate in voluntary retirement plans.

However, women have a slightly lower savings rate, at 6.5 per cent, compared to an average seven per cent among men in the same plans. Research also demonstrates women have lower levels of financial literacy, she said, and they’re more likely to remain in a single target-date, whereas men are more likely to be more active with their investments. However, this can put men at a disadvantage.

“We know that when people trade, they usually trade to their detriment.” Meanwhile, men’s account balances, on average, are much higher than women’s, said Young, noting this primarily boils down to the gender wage gap.

“This is where the story gets a bit sad, because the account balances for men on our platform are 30 per cent higher on average and about 40 per cent higher at the median.” However, when the research accounts for choice of occupation, the gap does narrow, she added. “When we put it all together and we look at account balances by income band, what we find is that those differences have largely disappeared. So on the surface it seems like men have higher wealth accumulations, but we see it really as a function of wages.”

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