Equal pay for men and women has been the law since 1963.
But today, over half a century later, women are still paid less than men - even with similar education, skills and experience. According to the latest statistics from the U.S. Census Bureau, American women who work full-time are paid only 78 cents for every dollar a man is paid.
It's a very real problem, and it's one that doesn't only affect women in their working years. Because women earn less, they're generally unable to save and invest at the same rate as men. This means that the wage gap persists in retirement.
Let's apply some math to the situation, with the help of statistics from the National Women's Law Center. The current wage gap results in a disparity of $10,876 per year. Apply that to a 40-year period, and that means a woman who has worked full-time would miss out on an additional $435,040. Just imagine how that additional near half-million could boost your nest egg.
Moreover, since your lifetime earnings and work history influence your Social Security benefits, women generally receive far less from Social Security than men. In 2014, the average annual Social Security benefit for women 65 and older was approximately $13,867, whereas their male counterparts brought in about $18,039.
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You don't have to be a math whiz to calculate the immense impact these figures have on women's retirement happiness. The good news? There are a few ways to help mitigate the lifelong effects of a wage gap. Here are a few examples:
1. Save smarter. There are a few saving options we believe women should never pass up. One is taking full advantage of an employer match, if available. This is essentially "free money" that's being offered in a tax-efficient savings vehicle. Even if saving is a challenge, everyone should seek to contribute at least the amount that will make them eligible for the match. This incremental amount likely won't completely make up for the wage gap, but it will help.
2. Invest for growth. Women are generally more conservative investors than men, and while that may help with protection from volatility in the stock market and from fees associated with excessive trading, it also places women at risk of outliving their savings. Women typically live much longer than men, so they'll need more money to sustain a longer life. It's for this reason that women likely need to have a significant allocation to stocks in their portfolios - and women probably need to maintain that allocation well into their retirement years.
3. Have a strategy for claiming your Social Security benefits. If you are married, divorced or widowed, you have hundreds of claiming options beyond just your own earnings history. For example, the "Claim and Suspend" strategy is often used by married couples with a large disparity in earnings. In this case, the higher-earning spouse would declare for benefits and then immediately suspend claiming. Then the spouse with the lower earnings history would get an opportunity to claim a spousal benefit, based on their higher-earning spouse's history.
Until true pay equality is achieved, women will have to remain particularly vigilant when it comes to their finances in retirement. A knowledgeable financial adviser can help you work out which strategies may be best for your unique situation.
The information presented in this material are for generation information only and are not
intended to provide specific advice or recommendations for any individual. Stock investing
involves risk including loss of principal.
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Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of "Your Money" on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at
