There are so many reasons to celebrate Women’s History Month, most notably the trailblazers and visionaries of the past and present, who have championed gender equality, calling out the economic, social, cultural, and political oppression women have faced for over a century.
THE SLOW WHEELS OF PROGRESS
Despite progress made, it has been painfully slow and significant gaps still exist for women, especially around financial equality and sustainability.
Search trends suggest that women may need more education than men around finances to achieve financial gender parity. Type “financial seminars for men” into your search bar and Google will assume you really meant to search for “financial seminars for women.”
Historically speaking, men have had more opportunities to natively learn about and experience the power, independence, and financial security that money can provide. Swooping in to carve out specialized training exclusively for women may be helpful, but there are greater risks than lack of educational opportunities.
The disparity between the economic and financial well-being of men and women is deeply rooted in the structural and systemic barriers to achieving parity. This includes but is not limited to workplace discrimination, gender biases, archaic policies, lack of institutional paid maternity or family leave, affordable childcare, and occupational segregation.
Add salt to that wound with a global pandemic. The National Women’s Law Center reports that 2.3 million women have left the workforce since the pandemic began one year ago, bringing the women’s labor force participation rate to its lowest since 1988. Our societal belief system is that a woman should carry the burden of unpaid work as the primary family caregiver and nurturer, thus further reducing her ability to earn income.
Though women all have the innate capacity that men have for financial opportunity and security, women fall behind over time due to these societal norms and systemic barriers.
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WHAT CAN YOU DO TO HELP YOURSELF?
Get Paid What You’re Worth—ask for a raise
Women make up just over half of our U.S. population and workforce, yet they still earn less than their male counterparts. The gap has narrowed over the years to approximately 81 cents for every dollar earned by men. For Black, Hispanic, and other Indigenous women that gap still hovers at 75 cents for every dollar a white man earns, which means they make 25% less than men. And here in Vermont, the median annual income for women is much less than the median salary of men. At the current rate of progress, the gender pay gap alone will not close until 2093.
It was once believed that these earning discrepancies were partly due to women not asking for a raise as often as men. That theory has been debunked by several studies. Women do ask, they just are not as likely to get the raise.
Research suggests that gender bias, female communication styles, not wanting to cause a rift with her boss, or using emotional-based words (“I’m sorry,” “I hope it’s OK,” or “I feel guilty for even asking, but…”), and focusing on past contributions and achievements for the basis of a pay raise versus future job role expectations and impact, contribute to a lower success rate for women.
Here are three empowering steps you can take to get paid what you’re worth:
- Do your research and pull in market salary data to present to your boss. Visit sites like SalaryCom, GlassDoor, Payscale, or the U.S. Bureau of Labor Statistics for job salary information. Another step is to search Indeed.com as if you were searching for a new replacement job and view the going market rate for that role at another company. Share this information with your boss.
- Ask your boss what you can demonstrate or change to receive a pay increase. It may feel uncomfortable, holding your boss accountable for setting clear expectations, but without them, he/she is off the hook for making decisions based on fair and equal standards. Additionally, if you hear something that you can do to meet expectations, it gives you a pathway for further development to achieve those expectations, and eventually get that raise.
- An even braver step is to ask your boss if your pay is in alignment with the pay of your fellow male colleagues. This may feel very uncomfortable and you’ll want to make sure that your question is not threatening. Who knows, the question may prompt a new level of awareness that influences your boss to take company-wide action through an audit in support of gender pay equality.
Be Prepared for Retirement Now—understand your future Social Security payments
One reason it’s important to get paid what you’re worth is that your future Social Security monthly payments are calculated based on your lifetime paycheck earnings. Today, women receive less in Social Security and pensions compared to men.
According to the National Institute on Retirement Security, women 65 and older receive 25% less income than men in that age group. The older the retiree, the bigger the gap; women age 80 or older receive 44% less income than men of the same age. Female retirees are 80% more likely to fall below the poverty line than male retirees.
The culprits? Women’s longer lifespan and the gender pay gap over a lifetime.
Don’t wait until you are near retirement to discover what your monthly Social Security benefits will be. Create your Social Security online account now and access the Retirement Estimator tool to learn about the future minimum and maximum benefits you are slated to receive based on your current earnings and potential retirement ages.
If you are nearing retirement and have had a marital change, consult with a professional expert to help you make the best selections for your Social Security benefits. It’s important to understand how a divorce, widowhood, or remarriage may affect you. For example:
- You may be eligible to receive benefits based on your ex-spouse’s lifetime work value if you were married for at least 10 years.
- If you remarried at age 60 or earlier, you won’t be eligible for your ex-spouse’s or deceased spouse’s benefits if you remain in your new marriage.
- If you are widowed, you could be eligible to start claiming benefits at age 60 rather than waiting until the minimum age of 62. Be cautious here, as Social Security benefits typically produce a larger monthly payment the longer you wait.
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Know Your 401K—actively choose where your money is invested
Women are more likely to have less money in overall retirement.
If you work for a company that offers a 401(k) plan and are eligible to save for your future, do it! This is one of the main ways to build up savings for your retirement.
Data from the U.S. Census Bureau for 2017 found that while 79% of workers were employed by companies that had a 401(k) or similar tax-deferred plan, only 32% of American workers were saving anything in those plans.
For women who do contribute to a 401(k) plan, the average account balance lags that of men by $42,000, primarily because of the gender pay gap.
Start contributing early and rely on automatic deductions from your paycheck for a more secure retirement, and understand how and where your contributions are being invested.
Employers use many different investment companies to provide the 401(k) plan (think John Hancock, Charles Schwab, Fidelity, Principal Financial Group, etc.). These are companies that hold and administer your employer-sponsored plan. They are not the companies that your money is being invested in. Think of them as your own personal investment brokers who offer a limited variety of investment choices.
Most employer-sponsored plans automatically choose a default investment option for you and put your money into a target-date fund, dated according to the year you are expected to retire based on your current age. Rather than accept the default choice made on your behalf, be active and learn what other investment options are available in the plan. For example, some plans may offer a variety of mutual fund types that are focused on growth, value, income, balanced risk, bond funds, and cash equivalent investments like a money market fund.
I know it sounds daunting, which is why most people accept the default target-date fund rather than select various investment options on their own. You’re not alone if you don’t understand your plan. Only 1/3 of Americans, women, and men, understand how their plan actually works. Dip your toes into learning about your options. It will give you greater confidence in planning for the future. Contact your HR department and ask for a copy of your Plan Document. They should be able to give you a copy of your plan.
From there, ask how you can access your plan through the provider (Schwab, John Hancock, etc.). In most cases, you should have the ability to access your account online where you can view and learn about all the investment options, make changes, access copies of your statement, and have direct access to the provider’s customer service if you need any help. Some providers will even make financial advisors available at no additional charge to walk you through your options and explain the differences.
Life Insurance – Get insurance on your spouse/partner
I saved this for last because nobody wants to think about their mortality, especially if you are in your early 20s, 30s, or 40s. Plus, thinking about purchasing insurance on the life of a loved one, can feel like putting a bounty on your partner’s life. This is an emotional financial decision and one that is often overlooked as part of creating financial sustainability.
Some 90% of women will be solely responsible for their finances at some point in their life. To that point, 75% of women in a male-female relationship will be widowed by an average age of 56.
Both you and your spouse or partner should have life insurance. This financial protection is for the living. For women especially, who are not working full time or at all, not the breadwinner, or the primary family caretaker, this protection will ensure the continuation of family operations after the loss of a loved one. Think about the mortgage or rent payment, car payment, groceries, clothing, cell phone bills, etc.
There are two different types of life insurance, term and permanent whole life insurance. Term insurance provides coverage for a specified and fixed period, such as 20 years. Typically, this is the most affordable way to provide protection since it is basic protection that provides a payout amount when someone dies. It’s a great option if you are younger or looking for protection for household financial obligations based on where you are in your life.
Permanent whole life insurance is more costly and is typically used to cover significant financial obligations outside of everyday family finances. It also has a cash value component, meaning that part of your premium is invested and grows at a guaranteed rate that can be tapped (cashed in) during the timeframe you own the policy.
THE ECONOMIC AND FINANCIAL GAP FOR WOMEN
These are tips to get you started in moving closer to financial sustainability and help close the economic and financial gap between men and women. While helpful, until we collectively address barriers, institutional change, and cultural norms, this gap will continue to exist for many women.
The Global Gender Gap Report 2020 leaves a bleak reality that none of us reading this blog today will experience gender parity in our lifetime, citing that it will take nearly another 100 years to close the gap. That is a sobering thought while we stand up for ourselves and change in hopes of a more inclusive world.
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