We may have come a long way baby, but we still have a long, long, long way to go.
In the past ten years, the gender wage gap based on average annual earnings improved by only .8%. If the pace of change continues at the same rate as it has since 1984, it will take another 40 years for women and men to reach earning equality, and substantially longer for women of color. Black women’s annual earnings won’t match white men’s until 2119. Seriously? Unacceptable!
Still, we have a lot to thank ourselves, our mom’s and our grandma’s for in fighting for equal pay since women entered the workforce in great numbers. In 1950, only 33% of the American workforce was women. In 1975, that rose to 40%, and in 2019, women comprise 47% of the total labor force. And while the number of women and men in the workforce is nearly equal, the pay isn’t. With some exceptions, women are still only earning 78% of what men earn.
What does that mean for us goddesses over 40? Potentially, a bleak retirement outlook. Women are 80% more likely than men to be impoverished at age 65, regardless of race, education, and marital status, according to the National Institute on Retirement Savings.
That wage disparity becomes a gaping maw once we reach retirement age. Lower wages mean women need more time to save for retirement, and when they do, they often retire with fewer assets and smaller pensions than men. On top of that, less time in the workforce also lowers our Social Security benefits. In the United States, 61% of caregivers are female, and the retirement system does not account for the caregiving roles women take on. The average women takes 12 years out of the workforce for family caregiving, causing a big hit to her lifetime earning numbers.
Even though baby boomers, Gen Xers, and even millennials are facing an uphill battle on the road to retirement, there are steps we can take to make retirement as financially healthy as possible. If you're still in the workforce, it's not too late!
Start contributing as much as you can into your 401k or IRA. In 2019, you can sock up to $19,000 in your 401k and $6,000 in your IRA. If you’re over 50, you can make an additional “catch-up” contribution of $6,000 into your 401k and $1,000 to your IRA.
Talk to your HR department to find out what retirement plans are available and take advantage of any employer matching funds.
If you don’t already have one, get a financial advisor and talk to them about which mutual funds offer IRAs with low administrative expenses or opportunities for tax breaks.
Do everything you can to increase your wages before you retire to increase the benefits you’ll receive from Social Security. Check out the Department of Labor or Salary.com to get an idea of the salary range for your current job. If you are more than 10% below the average, it’s worth it to talk to your boss about a raise. It’s not always an option, but you might consider leaving your current job if your company is not willing to pay you what you're worth. Look for training, certifications, and special projects to build skills that might lead to a better paying job.
In addition to your IRA and 401k contributions, open an interest-bearing savings/money market account or invest in long term CD’s. If you put just $250 per month into one of these, you can expect to accumulate $42,486 over the next ten years. In 15 years, that same $250 per month will have grown to $75,556. If you can increase that savings just 5% per year, by year 15 you’ll have amassed $102,897.
WISER – Women’s Institute For a Secure Retirement is an excellent resource for everything to do with retirement. They have retirement plan and retirement income checklists, advice on pensions and much more.
It’s never too late to take your financial future into your own hands.