You've Come a Long Way, Baby

By Greer Gibson Bacon, CFP®
In 1968, Philip Morris launched one of the most famous ad campaigns in history.  Using the slogan “you’ve come a long way, baby”, it sold Virginia Slims cigarettes to the newly emerging feminist, a young woman who was going places in style.  That year, she earned 58.2% of what her male counterpart earned1.
Today, the gender pay gap has narrowed considerably.  Recent studies by the Bureau of Labor Statistics and Pew Research Center show the average woman now earns 83% of what the average man earns.  But, this doesn’t tell the whole story.  For example, women ages 20-34 earn 90% of what men earn while those age 55 and older earn only 74%2.  
Today, more women have greater education and workforce participation.  Yet, the retirement gender gap persists.  In 2012, 17% of all women age 65 and older lived in poverty, compared to 12% of men3.  This isn’t surprising if you consider:  
  • Women have lower lifetime earnings.  Not only do women earn less, but 22% of all women interrupt their careers to care for children and (increasingly) elderly parents.  This results in lower lifetime earnings.
  • Women receive smaller retirement benefits.  Social Security and employer pensions are based on how much you make and how long you work.  In 2014, Social Security paid a monthly worker’s benefit of $1,488 to the average man and $1,167 (78%) to average woman4.  Lifetime earnings parity results in benefits parity.
  • Women save less.  Women have less capacity to save because they have less lifetime earnings.  According to the Department of Labor, only 76% of eligible women contribute to their employer’s plan, compared to 82% of eligible men.  So, they’re missing out on the growth of their own savings, as well as employer matching contributions (free money).  That said; many women can’t participate in their employer’s plan because they work too few hours.  Similarly, many fail to “vest” because of career interruptions.
  • Women live longer.  Today, the average life expectancy for a 65-year old woman is 86.3 years, compared to 84.5 years for a 65-year old man5.  So, her retirement savings must stretch further.
  • Women invest more conservatively.  Many women are too conservative with their investments, possibly lacking knowledge about investments or confidence in their skill.  While this may prevent them from losing money, it (also) may prevent them from achieving their goals.  Only 36% of all women seek advice.
Here’s the irony.  Numerous studies by the University of California (Berkeley), Vanguard, Fidelity and others show that women make better investors than men.  Why?  They’re less impulsive, which keeps them focused on their end game and trading expenses down.  
Since 1968, women have gained a lot of ground financially.  But, baby, we still have a way to go.  If you relish your independence, this is my advice.  If you haven’t started saving for retirement, start now.  And, if you have started, save more.
3Economic Policy Institute. 
4Social Security Administration.

This article first appeared in the June/July 2017 Spokane County Medical Society Magazine. The information referenced in the article is current as of date of publication.




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