For women, several considerations can have a big impact on your financial life — longer lifespans, the persistent gender pay gap, greater time spent out of the workforce and growing wealth are just a few. As the world continues to feel the effects of the pandemic and roles at home and work are in flux, these realities are emphasized even more.
Here are four actions that can help you take control of your financial future:
1. Understand real impacts of the gender pay gap
Despite advancements, the gender pay gap remains a reality. Women who work full-time earn an average of 81.6 cents to every dollar that full-time, working men earn.1 This discrepancy can cost American women between $700,000 to $2 million over a working lifetime.1
What you can do:
- Where appropriate, don’t be afraid to negotiate for a higher salary.
- Consider regularly saving a greater percentage of your income than the average man.
- Think about partnering with a financial advisor early in your career. They can develop an investment strategy for you that is personalized to your goals and may help you reap the benefits of having savings grow more over the long-term.
In the chart below, the difference between the person who begins investing at age 35 versus the one who starts at age 55 is $335,178, even though the 55-year-old saves more per year, on average.
Source: Investment Returns Calculator, calculated for time horizon and annual contribution amount. The example is hypothetical and assumes a 6% annual rate of return. The figures do not reflect taxes, investment or product fees or expenses which would reduce the figures shown here or imply any guaranteed rate of return. Past performance is not a guarantee of future results.
2. Be mindful of your financial and/or career progress
Women often juggle multiple responsibilities and are more likely to face career interruptions due to childcare, caring for aging parents or providing other family assistance. Since the pandemic began, this has become even more apparent. Women ages 25-44 have been three times more likely than men to not be working during the height of the pandemic due to childcare demands.2 Time away from the workforce — pandemic-related or not — can impact financial and career progress.
What you can do: Take time to review your finances with your financial advisor, who can help you make adjustments to stay aligned with your goals and priorities.
3. Invest with intention
Women’s wealth in the U.S. and around the world is increasing. With that, so is women’s impact on the economy. In fact, women now control a third of U.S. household financial assets — more than $10 trillion.2 And by 2030, a massive wealth transfer is expected: American women are projected to be the recipients of the majority of $30 trillion in financial assets from baby boomers.2
What you can do: Make your money work for you. Investing with intention and confidence can be one of the best ways to build savings and help you achieve your financial goals. An Ameriprise financial advisor can help you develop a long-term investment strategy that can help you improve the growth potential of your investment portfolio over time, while considering your:
- Goals such as retirement, travel, home improvement and college for your children or grandchildren.
- Time horizon to achieve your financial goals.
- Investment risk tolerance, or your ability to ride out short-term market volatility for potential long-term gains.
4. Prepare to potentially live longer
Women live an average of five years longer than men, according to the Centers for Disease Control and Prevention.3 With more time in retirement, your money will need to last longer to cover living and healthcare expenses.
What you can do: With an advisor, consider balancing growth-oriented investments with guaranteed and more stable income sources in retirement. Growth-oriented investments often include stocks, while guaranteed and stable income sources include:
- Social Security benefits, which are available to you beginning at age 62, unless you meet certain requirements
- Annuities in payout
- Certificates of deposit through a bank, which earn a fixed interest rate
Your financial advisor will help you develop a strategy that considers the expenses associated with a longer lifespan.
Feel more confident in your future
The unique circumstances women face highlight the importance of building financial confidence throughout a lifetime. Your Ameriprise financial advisor can help you evaluate these varying factors, among others, to help you stay on track to achieve your financial goals.