An editorial in the Baltimore Sun addressed the
issue of the wealth gap between men and women. The editorial addresses some but not all of the issues
that lead to this problem. As the editorial board stated: The wealth gap, a
consequence of realities women face throughout their lives, leaves women
experiencing financial hardship and distress at a disproportionately higher
rate than men. Financial hardship is often a precursor to emotional distress
and physical ailment, with cascading negative implications.
What is meant by the gender wealth gap? It refers to the difference in accumulated financial resources between men and women.
Some of life’s difficulties that apply and hurt women more so than men are, divorce, single parenthood,
caring for ageing parents or ill spouses, disability, and the inevitabilities of old
age, and widowhood. Women who face these issues understand that each of them can wreak havoc, practical, economic, emotional and physical on their life and plan.
Underlying the issues is the fact that women earn less and thus accumulate less wealth than men. This leads to a wealth gap that has the potential to and often does increase the
devastation for women.
Raising awareness that women earn less may catalyzing remedial
action both individual action and action by policymakers. The burden of having women who are older living in poverty is not exclusively borne by
the individual; it ripples through families and communities.
A recent study cited by Barron’s concluded that the lifetime gender wealth gap
could translate to a difference of greater than $1 million in accumulated
wealth. While the actual dollar amount will vary by individual and
circumstance, the gender wealth gap exists across the socioeconomic spectrum.
One significant reason is that women earn less than men by about 20% for the same work. A 20% income differential, compounded over a lifetime, translates to significant accumulated wealth differential. While understanding all the causes of gender income disparity is essential before drawing conclusions about pay equity, we know that the gap exists and places many women at a financial disadvantage. Also, by choice or
necessity, women assume the lion’s share of family caregiving, either staying home to
raise children or interrupting careers to care for children, grandchildren,
ageing parents and spouses.
Less pay and intermittent work translate to less accumulated
social security and fewer retirement savings and pension plans. And
while nonworking spouses may be entitled to a portion of future Social Security
and pension/retirement streams earned by working spouses, the sad
reality is 40-50% of marriages in the U.S. end in divorce.
Divorce can take a
heavy financial toll on the finances of both spouses, but typically more on
women who stayed home to raise children. Years out of the workforce likely
means reentering at a lower salary level in the same industry or accepting any
job to pay the bills. According to a report by the U.S. Government
Accountability Office, women’s household income decreased by 41% post-divorce —
almost twice the decline that men experience.
Women’s orientation around money is more
likely to be focused on earnings and a living budget, and less likely to be
focused on strategic financial planning and long-term investing.
Finally, women in the U.S. live an average of five
years longer than men. This “longevity factor” means assets must last for a
longer time frame for women. It also means women are more likely to need
long-term care (70% of nursing home residents are women).
This confluence of events — caregiving, systemic
income disparity, societal realities, longevity — contributes to the gender
wealth gap, with women experiencing some form of financial inequity in their
lives in disproportionate numbers. In fact, women consistently name financial
hardship as a major life concern, and in women over 50, fear of financial
dependence is ranked a top fear. Many worry about outliving their savings or
being a burden to loved ones in retirement. That fear causes anxiety, and it
can compromise physical well-being.
We need to continue to fight for equal pay for women so that the women we work with and care for do not have the fear and anxiety they currently have.
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