Separation and Savings in Tax-Favored Retirement Accounts Among Canadian Men and Women

Recent research suggests that separations may shape inequalities (especially gender-based) in resources available at retirement. We contribute to this literature by exploring, for the first time, the impact of separation on contributions to tax-favored retirement accounts. Those accounts are not only a key savings vehicle, but also one of the main channels for benefiting from state funding of old age security in several jurisdictions. We focus on the Canadian context and on savings in Registered Retirement Savings Plans (RRSP). Furthermore, although the growth of cohabitation is changing couples’ internal economic organization and potentially weakening the impacts of separation, most previous works have focussed solely on the consequences of marriage breakdown for retirement resources. We address this limitation by comparing post-separation changes in tax-favored savings across union types for men and women. Our data are from the Canadian GSS-T1FF, a source linking survey data on family histories with administrative tax data covering the 1986–2013 period. We find that annual RRSP contributions decline after union breakdown for married men and women, and only mixed evidence that those declines are weaker among cohabitors. Our results help clarify the mechanisms whereby union dissolutions affect older age financial well-being. They also show that those life events impact not just private savings, but also the ability to take advantage of public funding for retirement.