Plus, how to plan for your own future.

It's likely that you're already aware that women earn less money than their male counterparts. According to the U.S. Department of Labor, women generally earn 82.3 cents for every dollar men make. Unfortunately, that highly publicized statistic is only the tip of the financial iceberg. "This number changes drastically for women of color," says Anjali Pradhan, an investment coach and founder of Dahlia Wealth. "For example, Black women make 62 cents; Hispanic and Latina women make only 54 cents; [and] Indigenous women earn 57 cents. Meanwhile, Asian women make 90 cents for that same dollar men—of all races—make."

For many women, it's easy to consider how the gender pay gap impacts your here and now: the deflated number in your bank account, how much you are able to save, and your ability to invest in higher education or a home. But, the truth is, the money you're making now can impact your retirement plan. Below, several financial experts are sharing the harsh realities of the gender pay gap—and actionable ways women can prepare for their future.

Portrait of mature businesswoman working on laptop at workstation in office
Credit: Thomas Barwick / Gety Images

What the Gender Pay Gap Means for Your Retirement

Since the gender gap is present on every rung of the corporate ladder, women will generally enter retirement with less money. "A woman working full-time would earn $10,000 less than her male peer on average in 2018," explains Pradhan. "This adds up to $407,000 over the course of a 40-year career, a number that is truly staggering."

Of course, the gender gap's influence stretches far beyond the confines of your personal bank account. "Having lower earnings means a woman's Social Security check will be smaller than a man's check working the same job, because of the lower lifetime contributions," says Pauline Roteta, CFA, CFP, who is the co-founder and CEO of a financial planning company called Pasito. "Also, it's important to remember we need to sustain ourselves longer on our retirement savings as women outlive men by five years on average."

Roteta says that, as a result, the gender gap directly reduces women's ability to retire early at the same living standard as a man working the same job.

How to Plan for Retirement

Since the gender pay gap is a harsh reality for most working women, it's a good idea to start planning and investing for your future now. Janelle Reid, founder of Divine Career Solutions, encourages women of any age to connect with a financial advisor to help establish a long-term strategy as well as stay on track with their retirement plan.

"Women who are at least 50 [years-old] should take advantage of additional contributions such as catch-up provisions, which are very helpful for women who entered the workforce late or [with] delayed saving for retiring due to [their children's] college tuition or other family obligations," she says.

Reid adds that women who are gearing up for retirement should understand how to optimize their Social Security. "It's common to start taking Social Security as soon as [you're] eligible; however, waiting until you reach full retirement age allows you to maximize your payout," she explains. "To increase retirement savings, you can decrease your spending habits and debt by establishing a budget. Use that budget to reduce your debt so that you can have more money to save towards retirement."

As for women who are in the beginning or middle of their careers? The secret might lie in your investment portfolio. "Women invest too conservatively, and miss huge potential gains to be had (over the long-term) in the stock market," says Catherine Valega, a certified financial planner at Green Bee Advisory. "You must think like an investor. Invest aggressively in stocks, for the long-term, in a diversified portfolio. I coach women daily to think of themselves as investors, not just savers."

To help, check out these four easy investing moves you can make today.

How to Negotiate Your Salary

Just because the gender pay gap exists doesn't mean you have to settle for your current wage. In fact, anyone who wants to close that gap should be negotiating their salary with their employer. Admittedly, asking for more money can be nerve-wracking; however, Reid says it's important to do your research.

"Know your worth," she says. "Aiming high allows you a cushion to negotiate for the win-win. Be prepared to quantify your contributions to the organizations, how you've added to the ROI to the organization, and the return of effort, or ROE. You have tons of efforts you've contributed into the organization that may not have resulted in a financial savings or gain, but it may have saved or eliminated time or helped to maximize a result. All of those things count and add value to the bottom line."

Once you've done your research, practice the conversation with a friend, family member, or mentor. After all, half of the battle is walking into the big meeting feeling confident and prepared. "This is your moment; you control the narrative of the conversation so, you make the first offer," adds Reid."Yes, it's going to be a two-way conversation with you and your leader; however, even though they may be the decision-maker, you set the tone of the conversation by setting the expectation and asking for what you want."


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