How Do You Close the Financial Gap as a Woman?

by Miranda Marquit · 4 comments

successful woman
One of the realities we see today is that there is a financial gap between men and women, especially when it comes to retirement.

This isn’t just about a wage gap. It’s more about the traditional attitudes in society and the roles women play that are more likely to result in a financial security gap in the future. Here is what Bloomberg Business reports about how many women end up in a precarious position in their retirement years:

“Lower Social Security benefits, longer life expectancy, and lower retirement savings balances because of lower-paying jobs all compound into this incredibly large shortfall,” said Gregory Ward, a senior financial planner with Financial Finesse.


If you are a woman, it’s important to consider your financial future and do what you can to avoid running into problems in your later years.

Why is There a Large Retirement Gap?

One of the biggest reasons for a large retirement gap between men and women is the fact that women’s careers often take a very different trajectory than men’s. Here are some of the ways that women traditionally miss out on the earnings that could lead to a more secure financial future:

  • Women are more likely to put their careers on hold to be caregivers, whether they are taking of their children or aging parents or in-laws. This means missing out on years of earnings, as well as promotions and raises that come with a straighter career path.
  • Women are more likely to work part-time in order to be more flexible as caregivers, which means they not only work less, but are also more likely to be working lower-paying jobs.
  • When women do work full-time, they are more likely to choose lower-paying careers that come with more flexibility, and that are traditionally seen as female-oriented.
  • Women are less likely to negotiate for higher pay, leaving them at a disadvantage when it comes to lifetime earnings.

This gap is one of the reasons that the Federal Reserve reports that 87% of the impoverished elderly are women. After all, women tend to live longer and have less money to support them in their old age.

Closing the Financial Gap

Once you realize that you could be at greater risk for financial problems in the future, it makes sense to take steps to close that gap.

Investing is one of the best things you can do to close that gap, but you might not have the money to do so if you aren’t working. If you are married and stay home while your partner works, it’s possible for your spouse to make a contribution to an IRA on your behalf. Consider this arrangement.

You can also look for ways to earn extra money. Start a side gig, or start a home business while you stay home. Practice negotiating skills so that you feel more comfortable asking for a higher salary when it’s appropriate.

Also, if you have a partner, pay attention to his or her retirement arrangement. Not all annuities pass on to a partner’s spouse. Figure out the best method of protecting yourself in the event your partner dies first during retirement so that you don’t lose a chunk of income.

It’s important to recognize that you might be at a disadvantage and to work to close that gap as early as you can.

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  • Kelly @ Brainy Chick Finance says:

    Women should always look to paying themselves first! Put money in your 401k and any extra savings towards a Roth IRA. Since women live longer, we will need to put aside more in our retirement savings!

  • Paul says:

    In the bullet list of reasons why women get paid less, there as a very large omission. Women are more likely to pursue careers that pay less.

    • David Ning says:

      Paul, that certainly doesn’t help. And plus, it’s hard to pursue a high paying career if a person takes a few years off just when she is probably the most productive and able to move up the ladder the most efficiently.

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