Retirement: Gender financial gap is worsening amid savings imbalance

August 10, 2021 | Stephanie Asymkos | Yahoo!Finance

Stacy Miller, CFP® was recently featured in a Yahoo!Finance article titled Retirement: gender financial gap is worsening amid savings imbalance. In it, author Stephanie Asymkos shares Stacy’s insights into why women are often fall behind men in retirement savings.

First, I think it is important to note that the gender wage gap means that women earn 83-cents for every dollar a man earns. Unfortunately, multiple factors can make it worse, resulting in the gender wealth gap, which is the lack of wealth needed to live comfortably in the future (retirement).

Some of the unique challenges that women face every day can have a compounding negative effect on their ability to successfully achieve their future financial goals. Women are often the caretakers in the family. This means taking time off work to care for children and aging parents. This time off means fewer opportunities for contributing to workplace retirement plans (for example, a 401(k) plan), and fewer opportunities for pay raises and promotions. Additionally, women statistically live longer than men, and therefore their retirement portfolio would need to be larger than men’s to last longer. The pandemic is exacerbating the already poor condition of women’s future financial security because it has profoundly affected sectors more commonly filled by women such as hospitality, travel, and education. Homeschooling became a requirement in some locations, and women have taken on the bulk of that responsibility. These factors are leading to a vastly wider gender wealth gap.

Compounding interest and compounding returns are the keys to successful investing. Saving and investing are the keys to future financial success. However, women are often busy managing their careers and their families. It is for these reasons that women often do not make time to manage their own finances and delegate it to their partners. It is not a lack of competence, but often a lack of time and sometimes a lack of confidence.

While money is the #1 stressor for women, taking action is their #1 source of confidence. So, what can women do to close the gender wealth gap in retirement?

  • Ask for a raise or a promotion.
  • Establish and maintain an emergency fund (3-6 months of cash that is only used in an emergency or crisis).
  • Maximize your opportunities in pre-tax or tax-deferred investment accounts; retirement, health and education accounts such as 401(K), IRA, HSA, 529, etc.; especially if there are matching opportunities.
  • Start having money conversations with your partners, parents, and kids.
  • Understand where your money is going every month.
  • Make S.M.A.R.T. (Specific, Measurable, Achievable, Realistic, and Timely) goals for saving and investing, decreasing expenses, and controlling debt.
  • Protect yourself and your family through estate planning (Will, Durable Power of Attorney (POA), Healthcare Proxy, Living Will, etc.) and with insurance (Life, Health, Property, Disability, etc.)
  • If due to time or interest you delegate your financial responsibility, make certain you delegate to an expert or someone you know, like and trust.

Invest in your future financial security now. Your future-self will thank you.

 

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