There is a lot of discussion these days around the impact of women getting a raise and the gender pay gap. This is an important discussion and one we should be having, after all, women live longer than men, and women also retire on average with about two thirds the money of men.
This is, in part because women take more career breaks, invest less money on average than men do, and also because women are paid less than men.
Many women think that getting a raise and closing this pay gap will solve all their money problems. And sure, it helps, and it can help a lot, but what you probably didn’t know is that investing what you have now and doing it smarter than men can earn some women even more over a lifetime than that raise….
Let’s take a look at some numbers…. Say you plan to have a 40-year career and make on average $85K per year. Over that career you will earn about $5.7M in total. That’s not too shabby!
But, what about that gender gap, where women on average only make 78 cents for every dollar a man earns. What happens if you do get that raise and close that gap? You would earn an additional $1.1M over the course of your career. Now that’s worth an awkward conversation or two with your boss, isn’t it? And if you get that raise? Congratulations! The future you is doing pretty well!
But let’s back up. Let’s say you don’t get that raise, but over the course of your career you make some smart moves and investments? You save 20% of your salary annually and you put it in the bank. At retirement, you would have about $1.5M saved. But what if you had invested that money in the markets instead of the bank?
Now, I’m not talking about becoming a day trader or betting on individual stocks here. I am talking about putting that money into a long-term, well diversified investment portfolio.
Depending of course on the markets and market performance, by the time you retire, its estimated that you could have a total of anywhere between $2M and $3M stashed away!
That’s right, you could have more money at retirement than the average man and have made more money, counting your investment returns, than if you had gotten that raise or the average man made in total earnings, thus closing the gender pay gap in an entirely different way!
If you are interested in chatting about this strategy of closing the gender pay gap with a fiduciary financial advisor who cares, shoot me an email or give me a call for a friendly chat.