The Financial Vulnerabilities of Being a Woman

A vintage Van Heusen ad (remind me not to shop there for my husband)

I remember once having a conversation with a male friend about how as a woman I feel more vulnerable.  I told him that every time I walk into a dark parking garage that might have just one or a few fluorescent lights flickering above, by myself, at night, I feel fear creep through my body.  To which he replied that he hadn’t realized that women felt that way since he as a male had never felt fear walking into a dark parking garage.  While in this conversation I was talking about feeling physically vulnerable as a women, women are also vulnerable financially.  While women in America have come a long way from the 1950’s of the Leave It To Beaver image of a dutiful stay at home wife/mom serving her husband, even in 2016 women generally remain more financially vulnerable then men for several reasons.

Women make less than men.  Luckily this isn’t true in my job, but we’ve all probably heard about the famous “gender gap.”  Women make 79 cents to every dollar a man makes.  Even in Hollywood, the top women earners make less than the top male earners.  If you think about the fact that a women makes 21 cents less for every dollar a man makes (I’m assuming in an equal position) then the lifetime difference of that is going to be significant.  Assume there’s a $100,000/year position for a man.  That means a woman in the same position is only earning $79,000/year.  Over 30 years, that’s an earning’s difference of $630,000!  That could’ve funded a lot of vacations, clothes and a house even after taxes.

Women are poorer in retirement than men.  It’s been well documented that women tend to be poorer in retirement.  According to this Reuters’ article, women are 80% more likely than men to fall into poverty.  A 65 year old woman can expect a 25% lower income than a man the same age.  Much of this has to do with the fact that women tend to save less for retirement, are more likely to have taken more time off from working and therefore accrue less social security and because they live longer.  The fact that women live longer than men, also means women should save more than men to prepare for a longer retirement, but as I just stated, women actually save less for retirement then men so in a way they are doubly under saving.

Women are more likely than men to have gaps in their employment.  Why?  Because women are more likely to take breaks from the workforce to be a caregiver.  Women take longer maternity leaves and are more likely to switch from full time to part time positions or take a break from working to raise young children and care for elderly parents.  This has several affects on a woman’s financial security.  One as mentioned above, she’ll accrue less social security.  And since social security tends to be the primary source of retirement income for the majority of Americans, it makes sense that this is a huge disadvantage for women.  Another consequence of working less is that you are less likely to contribute sufficiently to a 401k (or other equivalent employer-sponsored retirement account) which is probably the most efficient way to save for retirement for the vast majority of people.  Lastly, working less or taking a break from the workforce means a woman’s less likely to advance in the workplace to a higher position (and higher pay).  This already on top of the fact that women makes less than men in general to begin with as discussed above.  Again double whammy!

Women are more likely to be a stay at home parent.  There are several financial implications for a stay at home parent.  One, you become wholly financially dependent on your spouse for income and for retirement savings.  As a stay at home parent you don’t have access to a 401k of your own to save for retirement nor can you directly open an IRA since you have no earned income.  If you and your spouse are savvy enough you could open a spousal IRA but for the most part that responsibility and effort falls on the working spouse.  They open it like a custodial account for you.  If your marriage should dissolve and you end up needing to go back to work, you’ve now been out of the workforce for X years making it that much more difficult to get a job, let alone make a decent income.  I also think women are more likely to be financially blindsided in a divorce since many women tend to leave financial matters fully in the hands of their husbands.  Additionally, women are more likely to end up poorer compared to a man after divorce.  But hey maybe you married a rich guy and had a kid or two and you can live off the alimony and child support.  Charlie Sheen recently disclosed he pays $55,000/month in spousal support to his ex Brooke Mueller.

Women have less financial literacy than men:  I hope this isn’t true of the women who are here reading this post.  =)  But yes it’s not exactly a secret that women often lag far behind in financial literacy compared to men.  For every one financial blog or book written by a woman, I think I see a 100+ written by a man.  Several of my female friends including my own mother could care less about finances and are happy to leave it to their husbands/father or would be future husbands to manage.  Sadly, this mentality itself leads to more vulnerability.  I often wonder what would happen to my mom if my dad passed away.  While I’m sure he’ll leave all his assets to her, how will she manage it when she’s never so much as paid a bill in her life?  Luckily for her, she has my brother and me to help her, but not all women will have someone else to take care of them their whole life.  In fact, I know of married couples with kids still living in their parents’ home and getting economic outpatient care from their parents (not the other way around).

Lastly, the “I don’t care about finances/a man will take care of me financially” mentality of women is alive and well.  I’ve seen women who purposely don’t advance their careers because they assume a man will eventually take care of them once they are married.  I had a friend who saved nothing to support her boyfriend through medical school and residency because they planned on getting married and she banked on him taking care of her once he became an attending.  Seven years later they broke up and she was left with $0 in her retirement account and credit card debt.  Recently another friend finally decided to return to graduate school to get a higher degree.  When I asked her why she had been putting off a logical move for her career for so long (she’s 39 now and started working around 24 I assume) she told me she had been waiting to get married.  Her master plan had been to get married and have kids, so she felt no point in improving her career.  Moreover, her own mother discouraged her from going to grad school because she told her daughter to focus on getting married.  But now at 39, still unmarried, she has decided to go back to school.  Better late than never!  I personally don’t see anything wrong with her mentality per se, but that mentality put her at a huge financial disadvantage.  Had she gone to grad school right away or even just a few years after working, she would’ve increased her salary by $45,000/year.  She easily missed out on $400,000 of earnings and any investment growth had she invested any of that money.  I don’t think I’ve ever heard a male friend say they put off going to grad school or taking steps to advance their career because they might get married.

Being a woman’s great (I’m biased)! ? But you can see that being a woman can also mean you are more financially vulnerable compared to a man, which is precisely the reason why women need to get wise with their finances and not just leave it to their husbands or fathers to take care of them.  Not saying you can’t have your husband take care of the finances, but I strongly feel women should be involved in the household finances too.  And if you’re single don’t just wait for some knight on a white horse to take care of you.  Be proactive about your savings, retirement and investing today, by yourself.  That way if your knight never shows up or he turns out to be a toad, well you just saved yourself. ☺️

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