By:  Kimberly Lankford, GoBankingRates featuring Samantha Garcia, CFP®, AIF®, CDFA®, Wealth Advisor at Halbert Hargrove

Women face extra challenges when working toward building wealth. Not only do they tend to earn less than men, but taking time off from work (or reducing their schedules) to raise children or care for aging relatives makes it more difficult for them to save for the future — even though they may need a larger nest egg to help cover their longer life expectancies.

“Women continue to face headwinds that put them at greater risk of not achieving a financially secure retirement — the persistency of the gender pay gap, time out from the workforce for parenting and caregiving, and [the fact that] statistically, women live longer than men, which implies we have to save even more for retirement,” said Catherine Collinson, CEO and president of the Transamerica Institute and the Transamerica Center for Retirement Studies. “These factors can put a woman on a very different trajectory in terms of her long-term retirement savings and retirement outcomes.”

Here are six obstacles women face when building wealth, and what you can do to overcome them.

1. The Gender Pay Gap

Women on average earn less than men — 83 cents for every $1 paid to men. This gender pay gap has a snowball effect on so many other aspects of a woman’s financial life, making it harder to save for retirement, easier to land in debt and even affecting the size of their Social Security benefits. Starting out with a low salary can impact your earnings for years, especially if raises are based on a percentage of your income and future jobs base your salary on your previous earnings. That’s even before considering that many women take time off to raise children or care for aging parents.

But there are several things you can do to help improve your income. Start by doing some research to assess how your pay compares to others in similar positions.

“Have conversations with peers outside of your company so you can get that comparison,” said Samantha Garcia, a wealth advisor with Halbert Hargrove in Long Beach, California.

If you find you’re being underpaid, you should be proactive and ask for a raise. It may be intimidating to have this conversation when you’re young and getting started in your career, but that may be the best time to bring it up.

“Sometimes it’s easier to have those conversations at the entry-level positions, rather than when you’re 10 years in and you realize there’s a 20% difference between your pay and a male’s pay. There are bigger dollars then,” Garcia said. “The earlier you can start to have those conversations, the better.”

Now is a particularly good time to ask for a raise or other benefits because employers are making extra efforts to keep good employees.

“If you’ve been sticking with the company during COVID and now realize there’s a pay differential, it’s a great time to use that leverage to go after what you want — that pay or benefit increase. Have that fearless conversation with your boss,” Garcia said.

2. Having Less in Retirement Savings

Earning less money and taking time off to raise kids makes it more difficult for women to save for retirement — even though their retirement savings needs are usually larger because of their longer life expectancies.

“Because they earn less, they save less,” said Shelly-Ann Eweka, senior director of financial planning strategy for TIAA. “In general, women invest more conservatively, women retire on average about two years younger, and they live on average five years longer than men. It’s all compounding. They have less income and are living longer in retirement.”

TIAA’s 2022 Financial Wellness Survey found that a lot of people — both men and women — aren’t saving for retirement, but women are further behind. Only 31% of women are saving for retirement, compared to 44% of men. “And that’s a much bigger difference than we’ve seen in previous years,” Eweka said.

Since women may go in and out of the workforce during different periods in their lives, it’s even more important to start saving as early as possible.

“Women can sometimes delay putting money away for retirement,” said Gina Grippo-Martinez, a wealth advisor with ALINE Wealth in Long Island, New York. “The most valuable asset in building wealth is time. Time value of money is a compelling concept, as compound growth over time will have your money working for you. If you aren’t already, you need to be contributing as much as you can to your retirement plan. Investing in your retirement is one of the best financial decisions you can make. You don’t want to wait too long and lose out on compound growth.”

It can be difficult to find money to save after paying all of your bills, but you should actually take the opposite approach, Eweka said. Assess how much you’ve saved for retirement and how much you need to reach your savings goals, and then make saving one of your top priorities.

“Our research has been telling us that fewer than half of all Americans, men and women, even know how much they’ve saved for retirement, and only 35% know how much retirement income they’ll get,” Eweka said. “Start with knowledge — what do I have, what have I saved already? Then pay yourself first — set up that automatic contribution to the 401(k), Roth IRA, traditional IRA. You should be doing that, then building your lifestyle around the remaining income.”

Try to contribute at least enough to get your employer’s 401(k) match, if offered, and increase your contributions whenever you can.

“Before you start having kids, put as much as you can in retirement savings,” Eweka said.

No matter what happens later on in your career, that money will remain in the account and continue to grow for the future. You may be able to afford to contribute more than you realize. Eweka recommends increasing your 401(k) contribution by 1% every month for the next couple of months until you feel it.

“It’s going to take a few months for people to notice the difference in their paycheck,” she said. “You don’t realize how much you can afford to set aside until you do it. And it’s not an irrevocable decision. Just try it.”

Make saving for retirement a habit, even if you need to reduce your contributions in some years.

“There are times in our life that we’re going to be able to save more, and other times in our life we’re not going to be able to save as much. That’s OK, because that’s life,” Collinson said. “If we go in with a mindset that we’ll be able to save as much as we can, and may have to pull back from time to time, then we are in a terrific situation to benefit in the long term.”

Find other ways to save even if you don’t have a job that offers a 401(k). You can contribute up to $6,000 ($7,000 if 50 or older) to a Roth or traditional IRA as long as you have earned income from working, or your spouse can contribute to a spousal IRA on your behalf if you’re not earning income but your spouse is. If you are doing any freelance or self-employed work, you can make tax-deductible contributions to a Simplified Employee Pension (SEP) or a solo 401(k).

And if you have an eligible high-deductible health insurance policy, you can also make tax-deductible (or pre-tax) contributions to a health savings account, which you can access tax-free in any year for eligible medical expenses. You can use the money to pay your health insurance deductibles, copayments, and other out-of-pocket medical expenses now or in the future, and you can even use the money to pay premiums for Medicare Part B, Part D and Medicare Advantage plans after you’re 65 — making it a good way to build up some tax-free savings for health care costs in retirement. To contribute to an HSA in 2022, you must have an eligible health insurance policy with a deductible of at least $1,400 for single coverage or $2,800 for family coverage.

3. Being Too Risk-Averse When Investing

Studies have shown that women tend to invest more conservatively than men, which can also have an impact on their long-term savings. Being careful with money is admirable, but being too careful can backfire, if, for example, you keep too much money in a savings account instead of taking any stock market risk for your long-term savings. That “safe” money may actually lose purchasing power and not keep up with inflation over the years. Instead, it’s important to match your investments with your timeframe.

“There’s definitely a savings gap between men and women,” Garcia said. “We live longer than men, on average, and we have more years we have to plan for. If you’re just putting the money in savings and getting a pittance in the savings account, it doesn’t help us overall.”

One way to get started is to invest your retirement savings in a target-date fund, where professional fund managers invest your money in a diversified portfolio of mutual funds based on your investing timeframe. The investments start out more aggressive — primarily in stock funds — when you have decades to go before retirement, then gradually shift to more conservative investments as your retirement date gets closer.

If you want more personal guidance, you can work with a financial planner who can help you assess your retirement savings goals, how much you need to set aside to reach them and the best way to invest the money. Or you may be able to get some help at work — more employers are offering financial wellness programs that can provide complimentary advice and help you set up a financial plan, Eweka said.

4. Taking Time Off Work To Raise Children

Many women take time off from work to raise children, but often don’t realize the long-term financial implications of leaving the workforce.

“There are tremendous hidden costs of stepping out of the workforce. Not only do you give up income, but also some potential benefits and earnings history for future Social Security benefits,” Collinson said. “What could start out as a short time out from the workforce could last longer because after an absence from the workforce, it could be harder to jump back in — especially at the level of pay as when she left.”

Before you have a baby, start researching the costs and your employer’s benefits. Find out about your employer’s maternity (and your spouse’s paternity) leave benefits and other employee benefits that can save your family money over the long term, such as how much your employer helps contribute to a family health insurance plan.

“Understanding what benefits you have will be hugely important,” Garcia said.

Calculate the overall cost of leaving the workforce before deciding whether or not to step back, rather than just comparing your salary to the cost of child care.

“The child care expense gets people. They’re like, ‘That’s what I make,’” Garcia said. “Even if it’s an even paycheck, it still keeps your Social Security benefits intact, you still have your wage base, you’re still adding to your retirement account, hopefully, and you still have that income and you haven’t lost your place in the workplace. I know a lot of moms who leave the workforce and when they decide to go back, they haven’t kept up on their skills, and they end up starting at a way lower place. There’s more than just that paycheck.”

This is also a good time to find out about flexible work arrangements and whether there’s an opportunity to do some part-time or freelance work. During this tight labor market, employers are making more of an effort to try to keep good employees, and if you’ve been successful working remotely during COVID, that may open the door for more remote and flexible work in the future.

“A silver lining of the pandemic is it has revolutionized how we do work, and employers have discovered that employees can be productive working remotely and with flexible work schedules. This opens up a whole new realm of opportunities that were far less common than before the pandemic,” Collinson said. “Especially now, if somebody is thinking about stepping back into the workforce or looking for opportunities to continue working but with time for work-life balance, now is the time to explore those opportunities.”

Even doing some part-time or freelance work can help you earn some money, save for retirement, build your Social Security earnings record, and keep your skills and resume sharp.

“One of the most important things that a woman can do if she is considering taking time out of the workforce for parenting or caregiving is to be mindful of her decision-making, and to do an analysis in terms of the time stepping out, and is there a way to get the best of both worlds?” Collinson said. “Many women are stepping out of the workforce altogether, but it’s a lot easier to find a job when you have a job. If you’re considering stepping out of the workforce, consider finding ways to work part-time or do some freelance work and stay in the workforce, which makes it easier to dial back to full-time when she’s ready to do so.”

Also, take advantage of any special benefits that can help with child care costs, such as contributing pre-tax money to a dependent-care flexible savings account, if offered by your employer, or claiming the dependent-care tax credit for some of your child care costs if your kids are under age 13 and you and your spouse both work (or are looking for work).

Also, with more remote learning opportunities, it could also be a good time to enroll in a certificate program or earn other credentials that can help you get a job when you’re ready to return to the workforce.

5. Caregiving for Aging Parents

Even after your kids are grown up, you may not be finished with caregiving. A study by the National Alliance for Caregiving found that nearly 1 in 5 Americans provided unpaid care to an adult with health or functional needs in 2020, often an aging parent. This can have a big impact on your retirement savings because it’s often during your peak earning years, and you have less time to make up for the difference.

It’s important to have a conversation with your parents about their wishes ahead of time, rather than scrambling to find care in an emergency.

“You really should be having family meetings with your siblings and your parents,” Eweka said. Talk about their wishes and plans, and any preparations they’ve done financially. Do they have long-term care insurance or savings to help pay for care? Can you and your siblings all help each other provide care or help pay for care for your parents?

“Instead of just one person taking care of your parents, figure out a way to share the responsibility with spouses and siblings,” Grippo-Martinez said. “Caring for aging parents is incredibly draining, both physically and emotionally. Making a plan early on prior to the parent’s need is a wise decision that makes things easier for everyone involved and ensures your parents’ wishes are met.”

The earlier you can have the fearless conversation with your parents about what they would want if they need care, the better, Garcia said. But be careful that what you’re doing to help your parents doesn’t set you back financially.

“You don’t want to get so caught up in handling their financial situation that you end up having it detrimentally affecting your own,” Garcia said.

Before deciding to quit your job to care for aging parents, consider some of the similar options as you would when facing decisions about child care: Can you help provide some care while working a more flexible or part-time schedule? Is there another way your parent can get care? Can you share care with a home-care worker or other family members, so you could still do some work?

“What are some of the things you could do for part-time employment if you have to leave the workforce to take care of a loved one?” Eweka said. “There are jobs out there now that are more remote and give you flexibility in the time of day you are doing those roles. What are some ways I can earn something? It may not be what you were earning in the past, but it can still [provide] money to cover some of your expenses.”

6. Longer Life Expectancy

Women tend to live longer than men. The average life expectancy for a man turning 65 in 2019 is 18.2 years (age 83.2), and 20.8 years for women (age 85.8). However, women also tend to save less for retirement and have a smaller nest egg to spread out over their longer lifetimes.

Working a few extra years, even part-time, can help you save more for retirement, delay tapping your savings and could help you qualify for larger Social Security benefits.

“The longer you can work and continue to bring in income and accrue employer or Social Security benefits, the longer you can put off drawing down your savings. That’s more time for your savings and investments to grow,” Collinson said. “If there is any extreme market volatility, continued income from work can help ease the blow if there is some sort of shock in the financial markets.”

If you have some income coming in, even from a part-time or freelance job, you don’t need to worry about selling investments at a loss to tap your retirement savings for your expenses.

In addition to your retirement savings, estimate how much money you can expect from Social Security benefits. If you’re married and have earned less than your spouse, figure out if you’re likely to get more money from your own benefits or from spousal benefits. If you’ll be taking your own benefits, working a few extra years could help — Social Security benefits are based on your 35 highest-earning years, and if you have some $0 years on your record, working a few extra years could make a difference. Sign up for a MySocialSecurity account at to see your earnings records and estimates of how much you will receive if you claim benefits at different ages.

Think carefully about when to take Social Security benefits. You can take benefits as early as age 62, but your monthly benefits will be reduced if you take them before your full retirement age, which is age 66 for people born from 1943 to 1954, and gradually increases by two months for each birth year before reaching age 67 for people born in 1960 and later. You can receive larger monthly benefits if you wait even longer — for each year that you wait beyond your full retirement age, your monthly payout will increase by 8% until age 70.

“It is especially important to do your homework when thinking about and planning for your transition into retirement, and really knowing what to expect from your Social Security benefits,” Collinson said. “Research has found that many people are retiring before their full retirement age and are starting their Social Security benefits at 62, which is a greatly reduced benefit. Those are years that she could continue to build income and build her earnings history if she continues to full retirement age. And if she could delay taking benefits until age 70, she would end up with an enhanced benefit.”

The Social Security benefits are guaranteed lifetime income — so the longer you live, the further you come out ahead by waiting to take larger benefits later.

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