Photo Courtesy of the Huffington Post
Career 04 October 2017
Women have more opportunities today than ever before. Mothers are on the rise as primary breadwinners, and women are beating out men in college enrollment and degree attainment, according to the Pew Research Center.
Yet women still earn less than men (recent data shows that women earn 83% of what men do). Earning less now could have serious implications for your future. According to the National Institute on Retirement Security, women are 80 percent more likely than men to live in poverty during retirement.
The gender pay gap is alive and well, but maybe not for the reasons you think. Rather than outright sexism, societal norms and expectations may be influencing women’s choices in a way that lowers their lifetime earnings and retirement savings.
Photo Courtesy of PEOPLE Magazine
Why do women make less than men?
One of the biggest reasons women earn less could be the jobs they choose — and what they’re willing to ask for.
Women are less likely than men to pursue careers that offer a high earning potential, and they make up the majority of nearly all the least lucrative college majors.
As a woman, you may still be considered a primary caregiver in our society. Even in households where both partners have similarly demanding jobs, women are more likely to do the lion’s share of housework and child care.
For many women, that extra responsibility could lead them to opt for a career seen as “less intense” so they can still fulfill their roles at home. In some cases, women take breaks from their careers altogether in the name of staying home with children for a few years. Both of these things could contribute to lower wages overall.
Another possible reason for the gender wage gap? A reluctance to ask for more money. In 2016, an Earnest survey found that 26 percent of women aged 18 to 24 attempted to negotiate their salaries, as opposed to 42 percent of men in the same age group.
Photo Courtesy of the Huffington Post
Failing to negotiate your earnings can have big implications for your future, especially early on in your career. Once your base salary is set, your future raises and promotions will be based on that number. If you start with lower earnings, you could see smaller pay bumps later on, possibly leading to hundreds of thousands of dollars left on the table due to missed earnings.
How earning less impacts your retirement
The less you make, the less you can save for retirement — and that’s where things get really sticky.
Consider a matching 401(k) contribution from your employer. If you make $40,000 a year and have a 100 percent contribution match for up to five percent of your salary, you’re socking away $4,000 a year if you take full advantage ($2,000 from you and $2,000 from your employer).
But what if you were making $50,000 a year? With your employer’s match, you’re putting away $5,000 a year for retirement.
That extra $1,000 in savings may not sound like much, but it adds up with the power of interest. Over the course of 20 years, you would save up an extra $20,000. If you earn 8% interest on that money, it will grow to $50,000 during that time — more than doubling your money.
Don’t forget the impact of taking a break from your career. That’s money you aren’t earning and savings you aren’t putting aside for the future. You can’t replace the time money spends in the market. The longer your money is in the market, earning interest, the more you have in the long run.
What to do right now to fix your financial future
You don’t have to be part of these statistics; you can make moves right now to fix your financial future and build a comfortable nest egg.
1. Review your pay
Use a website such as PayScale or Glassdoor to get an idea of what others in your career are making. You can compare your pay to people with similar experience and education. If you’re underpaid, ask for a raise. The more you make, the more you can set aside for your future.
2. Start a business
If you don’t earn as much as you’d like to at work, consider finding a second income stream. Consult. Freelance. Drive for Lyft. Find ways to earn a little extra money on the side, then put that into your retirement account and watch it grow.
3. Start investing in your retirement today
Regardless of how much you make, now is the time to start investing for retirement. The longer you have to save, the more time your money has to grow.
If your job offers a retirement plan, get signed up. Try to contribute as much as possible to get the biggest maximum match. If your work doesn’t offer a retirement plan, you can still open an IRA and start investing for the future.
It may make sense to start with a robo-advisor such as Betterment or FutureAdvisor. These types of companies usually balance your accounts automatically, investing in a mix of assets based on your age, risk tolerance, and estimated year of retirement. Robo-advisors are low-cost options that often don’t require an account minimum — making them perfect for beginners.
4. Consider a spousal IRA
If you’ve chosen to take time out of your career to care for your family, you can still prioritize your retirement. It’s possible to make a contribution to a spousal IRA, even if you don’t have an income.
A spousal IRA is in your name only, but both you and your partner can contribute to it. It’s a way to ensure that you build your own retirement, even if you decide to stay home for a few years. Better yet, depending on your circumstances, the contributions may be tax-deductible. It’s true: Women are still at a disadvantage when it comes to long-term finances. But it doesn’t have to be that way for you. Start planning now, and you can retire comfortably later.
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Help! My Friend Is a No Show
Dear Armchair Psychologist,
I have a friend who doesn't reply to my messages about meeting for dinner, etc. Although, last week I ran into her at a local restaurant of mine, it has always been awkward to be friends with her. Should I continue our friendship or discontinue it? We've been friends for a total four years and nothing has changed. I don't feel as comfortable with her as my other close friends, and I don't think I'll ever be able to reach that comfort zone in pure friendship.
Dear Sadsies,I am sorry to hear you've been neglected by your friend. You may already have the answer to your question, since you're evaluating the non-existing bond between yourself and your friend. However, I'll gladly affirm to you that a friendship that isn't reciprocated is not a good friendship.
I have had a similar situation with a friend whom I'd grown up with but who was also consistently a very negative person, a true Debby Downer. One day, I just had enough of her criticism and vitriol. I stopped making excuses for her and dumped her. It was a great decision and I haven't looked back. With that in mind, it could be possible that something has changed in your friend's life, but it's insignificant if she isn't responding to you. It's time to dump her and spend your energy where it's appreciated. Don't dwell on this friend. History is not enough to create a lasting bond, it only means just that—you and your friend have history—so let her be history!
- The Armchair Psychologist