Evolution of Gender Patterns in Retirement Saving in Canada

A persistent concern regarding elderly people is their ability to sustain their economic well-being after they retire. To a large extent, consumption in retirement years is funded by savings decisions made during the pre-retirement years. Gender disparities in labour market earnings and employer-funded pensions as well as greater longevity suggest that the resources available to Canadian women in retirement will likely differ from those of men. Using 38 years of a nationally representative administrative database developed from personal income tax records, we examine the evolution of retirement savings patterns over the income distribution by age and birth cohort for women and for men. We find that although women are more likely to save at all ages, conditional on participation, they save a smaller amount and tend to be attracted to investments that on average offer a lower rate of return. Thus, policies that focus on the extensive margin of savings (participation decisions) may not reduce differences in economic well-being between women and men in retirement, and policies must also focus on the intensive margin (amount contributed). Last, across the income distribution we find substantial heterogeneity in significant gender differences in age, cohort, and period effects on both margins of retirement savings.