By Adelena Lopez, Inland Empire Consumer Region executive, Bank of America
While businesses are beginning to slowly and safely reopen, women workers left the workforce in disproportionate numbers during the pandemic – an issue that is set to exacerbate a growing wealth gap between women and men. According to the U.S. Bureau of Labor Statistics, there were 109,000 more women working than men, occupying 50.04% of positions, in December 2019. However, once the pandemic evolved, thousands of women left the workforce to accommodate responsibilities brought on by stay-at-home orders. When combining the pay gap with common workforce interruptions of parenting and caregiving – women may earn as much as $1 million less than their male counterparts by retirement age.
Thanks to a seismic shift toward increased equity for women, they are poised to move closer to true financial independence – though we know there is still a long way to go. A report from the World Economic Forum found that the gender wealth gap could take more than 250 years to close, and Bank of America’s Women Business Owner Spotlight found that access to capital remains a barrier for many women business owners.
Notably, younger women investors are twice as likely to lead their families’ financial decision-making than previous generations, according to Bank of America research. However, the research also found gender-based biases toward investors persist, making women feel they must prepare more for meetings and speak up proactively to be heard.
The good news is that we’re seeing a new generation of women changing the narrative around women and wealth. Younger women in particular are paving the way in financial empowerment and taking control of their financial lives: 75% of women under 45 manage their own finances compared to 50% of women 55 and older.
There are resources to learn more, such as Better Money Habits that offers tips around savings, retirement planning and even looking at beyond your salary to leveraging workplace benefits to your long-term financial advantage.
Here are some tips that working women can use to get on more equal financial footing:
- Start saving early to plan for eventualities – Acknowledge career interruptions, and the potential for increased healthcare costs and retirement expenses associated with living longer. Ideally, try to save at least 15% of your salary every year and take advantage of tax-efficient savings options.
- Break the taboo around money talk – Encourage more conversation between your friends and family about money management. Seek mentors and come up with the best long-term plan for you.
- Take advantage of critical wealth escalators and consider working longer – Be sure to participate in benefits like full 401(k) company matches, to help ensure long-term financial stability. Maximize Social Security and pension benefits.
Plan early and often, enlisting the guidance of financial advisor – Create a plan that matches your unique circumstances and stick to it. New research found that women feel positive about their financial advisors. Identify a financial advisor who understands women’s different financial journeys, from budgeting to saving for retirement, and can help you create a portfolio that has the potential to last your lifetime.