Gender Gaps in Finances and Retirement
It’s no secret that wealth and income disparity between men and women in America is still a problematic issue. Women make less money over the course of their careers than men — for every dollar that American men make on average, women make about 80 cents.
Gender Gaps by the Numbers
When you take other factors into account, the gap widens even further. For example, for every dollar that a white male earns, a Latina woman earns 54 cents. Also, single women are more likely than single men to have the financial burden of custodial parenthood and a lot of women enjoy less wealth-building fringe benefits (such as employer-sponsored retirement plans) denied to part-time workers. Add to that the fact that women live longer than men on average, meaning that women need to save more for retirement.
Women and the Pandemic
Women have been significantly affected when it comes to the pandemic. About 3 million have dropped out of the workforce and we won’t know the long-term implications when it comes to retirement savings for some time yet. But the truth of the matter is that when you’re not earning a stable income and not contributing to your retirement account, only negative outcomes are possible.
Women and Retirement Savings
The numbers speak for themselves. Women are behind in every metric when it comes to income and retirement savings. As far as income goes, the annual median income in 2019 was $85,500 for men and $57,900 for women and with retirement savings women were also lagging in 401(k) balances in 2020 — men having on average over $90,000 and women with just over $50,000.
The last year has been tough on women financially. Many have had to dip into savings accounts to make it through the pandemic due to being on lowered or no income at all. Hopefully things are turning around as the world faces the possibility of reopening to full steam this summer.
Making up that ground is vital to do, but in addition it’s important to really get your personal finances in order. Not taking on further debt, paying down any existing debt where possible, and increasing your financial IQ or financial literacy is essential to get a solid footing as you move forward. These things would obviously apply to anyone, no matter what their situation or gender, but especially someone who finds themselves behind the eight ball when it comes to income and retirement.
There certainly have been some strides taken toward positive change in mending these gender inequalities, but it would be naive to suggest that the problem is solved.
Some things that have been suggested to right this inequity are federal laws that make paid family leave more accessible, and to change tax laws that reward contributions to an emergency savings fund in the same way that retirement savings are supported.
It seems that a paradigm shift is inevitable. We need one that sees that men and women on equal ground when it comes to the economy, income and retirement.
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