Women are naturally more giving than men and, in the business world, this can be to our detriment as we tend to take on responsibilities without thinking about how they will affect us long-term. Because of this, women can end up with competitive financial goals. We save for retirement while saving for our children’s college education and taking care of elderly parents and grandchildren.
It is not always easy to see how saying yes all the time creates more stress and anxiety. It can also lead you to feel trapped as personal financial goals are put on hold to focus on other things.
To overcome this, it is important to understand that your current way of life is a choice you are making. There are other ways to do it. Ask yourself, what do I need for me? How can I get the quality of life I want and deserve? It’s easy to fall into the trap of thinking that there’s always more time but, well, there isn’t. There are only so many years to work before retirement and only so much money to be made in that period of time. Think about the long-term effects of the way you’re spending your resources.
Why Do Women Have Less Money?
Everyone knows about the gender pay gap but there are other reasons why women end up with less money than men for doing the same job. The truth is we can lose a lot by not understanding what we’re worth and how much we deserve.
● Women make less money across the board. Yes, women are paid less than men which means that we are not able to save as much as we can. That means fewer retirement savings, less in Social Security benefits after retirement, and not as much interest or portfolio growth.
● Women don’t negotiate as effectively as men, if at all. Generally, men are able to confidently ask for what they’re worth, if not more than what they’re worth. Most women in executive roles are not sure of their value and earn salaries that may be as much as a third less than men in the same position. Men are also more likely to feel confident enough to negotiate the salary for their first job, setting the tone for their earning potential for each subsequent stage in their career. Women are much less likely to do this and stand to lose a lot of income over the decades of their careers.
● Women work fewer hours. Over the course of her career, women work a total of 12 years less than men. Why? Mainly because they take time off work for things that men do not. Pregnancy and recovery are obvious reasons but women are also more likely to take time away from work to stay home with the children or take responsibility for the care of an elderly parent. This time away adds up to a lot of lost income.
● Women take more time off. In addition to taking time away from their careers, women also work fewer hours when they are still actively working. For example, they cut back their hours while their children are in school or stay home from work if one of the kids gets sick. This often affects the quality of the work they are assigned, too, which can change the entire trajectory of their careers.
● Women do not put themselves first. This is likely because women are more willing to put their personal lives ahead of their professional lives. Plus, this is often done without even thinking twice and tacit acceptance of the consequences.
The challenges that women face in the workplace depends largely on the industry and on the motivations that led us to our chosen careers in the first place.
For example, a lot of women pursue science because they have a passion for the subject. But women in STEM are frequently passed over for positions that go to men. Women rarely get offered leadership roles and are likely to be forced into administrative positions.
The medical field is another great example, particularly in nursing. Nursing is a traditionally female industry and about 90 percent of all registered nurses and nurse practitioners are women yet male nurses are still paid more. Why? In most cases, it’s because the men asked for more money. Women are more likely to feel they aren’t ready for a promotion or that they still have to prove themselves and therefore do not deserve to ask for more money.
We mentioned that women work fewer years and hours than men, taking time away to raise children or care for elderly parents and end up with fewer retirement savings and Social Security. So, how does this affect retirement?
On average, women live two years longer than men which means we have to fund more years with less money. Outliving her spouse can have significant financial implications for women as Social Security income may be reduced and any pensions or annuity income is likely to end. There are tax implications, too, as the deduction for a widower is less per person than that of a married couple.
Women also have higher healthcare costs than men which means that expenses increase as well. On average, a healthy 55-year-old woman pays roughly $80,000 more in retirement for healthcare than her male counterpart. Add to that the fact that they may need long-term care and the financial impacts are quite significant.
Only about 10 percent of women report being very confident that they will be financially comfortable in retirement. Many women push retirement because they do not feel prepared for what comes next. Saving less combined with not feeling confident enough to ask for what they deserve and you can see why women have a lot to consider when it comes to finances and retirement.
Any opinions are those of author and not necessarily those of RJFS or Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.