Whether it’s lack of inclusiveness or sexual harassment, women in the workplace tend to face challenges that their male counterparts never have to consider. And as new research from the US lays out, those challenges could actually act in concert to create an even bigger impact.
“Based on Bureau of Labor Statistics data, for every US$1.00 a man earns, a woman earns only about US$0.82,” wrote Maddy Dychtwald, co-founder of think tank and consultancy Age Wave, in the Wall Street Journal. “But that’s just the tip of the iceberg.”
According to Dychtwald, the gap would add up to US$411,000 for a man and a woman with the same intelligence, drive, schooling, and career who work full-time at median wages with no breaks until retirement.
But citing a study her firm conducted together with Merrill Lynch, she said differences in the life journeys of women and men — particularly with regards to caregiving — means the average women spends 44% of her adult life out of the workforce, while the average man spends only 28%. That includes time off that women may take to care for aging parents.
“In fact, adult daughters provide twice as many elder-care hours to aging parents as adult sons, according to the Center for Retirement Research at Boston College,” Dychtwald said.
Assuming a woman faces three career interruptions to care for her children, her aging parents, and her husband who has a health crisis when they’re both in their 60s, she said the 18-cent differential would balloon to give her US$1,055,000 less lifetime income than a man who didn’t have to deal with the same issues.
She also noted the existence of a wealth gap, saying that the average single woman has 32% less accumulated assets by age 65 than the average single man, even if they have similar levels of education.
To protect themselves from such financial impacts, Dychtwald recommended that women plan for career interruptions with tactics like saving extra money for time off, negotiating leave with an employer, or seeking a job with flexibility or other benefits that reduce the costs of moving in and out of the workforce. Women in relationships should also discuss options with their partner to share the expenses and opportunity costs of taking time off.
“Second, women need to understand their choices,” she said, saying they should weigh and plan for not just the impact on current pay, but also the potential effect on future pay, promotions, and access to wealth escalators.
Finally, she stressed the importance of planning for a long financial life. While the Age Wave study found 61% of women are more comfortable discussing their own death than money, women tend to live longer and retire earlier than men.
“That means women need to plan for longer, more costly retirements,” she said.
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