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Overcoming Financial Challenges Women Face

May 15th, 2019 | 5 min. read

By Lara Mazek, CFP®

Overcoming Financial Challenges Women Face - image

As a new mom and a CERTIFIED FINANCIAL PLANNER™, of which only 23% are female, I am keenly aware that the financial challenges men and women face are not equal.

Society has come a long way in improving gender equality, but there are still many roadblocks that are unique to women when it comes to planning for retirement – earning less, spending more time out of the workforce and living longer, to name a few.

So, how can women compensate for these setbacks? It starts with understanding the extent of these challenges, and then formulating a plan for how to come out ahead.

Bridging the Gender Pay Gap

The median salary for women is 21% lower than it is for men. Reasons for this disparity range from simple bias and discrimination to greater time out of the workforce to care for children and other loved ones, which causes women to receive fewer promotions and job opportunities.

Think about that. For every dollar a man makes, a woman makes 80 cents. To some, it may not sound like much. But that difference is huge over time. Not only can this mean missing out on hundreds of thousands of dollars of income over a lifetime, it can also mean less access to company benefits like health insurance and retirement plans, including employer matches.

The good news is that the gender pay gap doesn’t have to keep you from achieving a comfortable retirement. Here’s what you can do:


There’s no quick fix. The surest way to building wealth is to start saving as early as you can, save consistently and keep at it for a long time.

To make sure you’re saving enough, create a savings plan. There are many different apps and websites online that make it easy to put together a budget. This will help you manage your spending and find expenses you can cut in order to save more.

How much you should save depends on your age. Generally, you should set aside at least 15% of your income for retirement. However, because of the extra setbacks and hurdles women face, you might be better off saving as much as 20%.

For example, let’s imagine a man and woman who share the same job. Both are 25 years old and plan to retire at age 65. The man is paid a $75,000 salary while the woman earns 20% less with a $60,000 salary. If both save 15% of their income each year until age 65, the woman would have $680,000 less than the man, assuming an 8% annual return. She would close that gap by saving around 20% of her income.

The longer you wait to start saving, the higher that number gets. If you can’t afford to save that amount, try to save as much as you can. Make sure you’re taking full advantage of your benefits at work. If you get a 3% match, that’s 3% less out of your pocket that you’ll have to save.  Also, when you pay off a debt or get a raise, revisit the budget and put that extra money towards retirement instead of boosting your lifestyle.

I know it’s frustrating to sacrifice some of your lifestyle today just because of what’s essentially a systemic issue outside your control. But remember, you’re doing yourself a huge favor in the long run.


Women not only tend to be better savers, but also better investors than men. Studies have shown that female investors outperform their male counterparts by an average of 0.94% per year. When investing for long-term financial goals, even small differences in return matter. Using the example from above, if the woman saves 15% but consistently earns 0.94% more in investment returns than her male colleague, the $680,000 savings gap at retirement would shrink to only about $19,000.

The reason women earn higher investment returns on average is because we make fewer trades in reaction to market movements. Unless you’re close to retirement, you should have your money invested in growth-oriented investments so that it’s working as hard for you as possible. Then avoid making changes in your portfolio when the market inevitably incurs periods of volatility along the way.

Of course, choosing the right investments to get there is its own challenge. So, it’s helpful to have a professional as a partner to help guide you in the right direction.


A financial adviser can help you build a plan that’s personalized to your situation and goals, so you can stay ahead of any setbacks. Don’t wait until you’re retired or close to retirement. The earlier you get a strategy in place, the better off you’ll be.

An HSBC study of worldwide retirement saving habits found that people with some kind of financial plan have more than three times as much in their nest egg than those with no plan at all. And, savers who go the extra mile by working with an adviser have more than four times as much saved for retirement than non-planners.

Funding a Longer Retirement – Often Alone

Women live an average of five years longer than men, which means no matter your marital status, you should plan to be able to live independently. Here’s what you can do to help secure your own financial future:


I think the first step is to grow your financial know-how. People are often scared or uncomfortable when it comes to talking about money or numbers in general. In my experience, it’s typically women who are less confident than men. Research indicates this is common. In another HSBC retirement survey, 42% of women rated themselves as well-informed on financial matters compared to 54% of men.

Perhaps this financial self-doubt can be attributed to the fact women are still less likely to take responsibility for household financial decisions outside of buying groceries and other day-to-day purchases. In most households, the male partner is more likely to assume sole financial control over saving and investing money, paying bills, and managing credit cards and other debts.

Women need to improve their financial literacy and take larger roles in household finances because one day they will probably find themselves in charge. For me, the more I learned and the more familiar I became with personal finance, the more empowered I felt.


All women should contribute to a retirement account in their own names – even if you’re a stay-at-home parent. If you’re married and don’t earn an income, your spouse can contribute to a spousal IRA in your name. A retirement account in your own name is important because it is essentially money that is exclusively yours for retirement. Should anything happen, you will at least have one source of income you can easily access.


Saving early is one of the best ways to do this, but there are other ways to catch up if you’re a bit behind and nearing retirement.

One way to increase your income in retirement is to delay Social Security. You get an 8% permanent increase in your benefit for each year you delay past your full retirement age until age 70. One cautionary item there though: delaying Social Security may not be the best option for you if it means spending too much of your retirement savings before your benefit starts. Also, if your spouse passes away, you get to keep the larger of the two benefits, so you may end up never seeing your delayed benefit. There are many different considerations when it comes to Social Security. Therefore, as one of your most important sources of retirement income, be sure to talk with a financial adviser who can help you make the appropriate decision.

Another way to maximize your spendable income in retirement is to lower your fixed expenses. One of your financials goals should be to pay off your liabilities before you retire. Without things like mortgages or auto loans, you’ll have more retirement income at your disposal. Plus, all the freedom and flexibility that comes with it.

I understand the road to wealth isn’t exactly fair right now. But I know women have the smarts and ambition to overcome just about anything. With a financial plan that incorporates these challenges, there is no reason you should have to sacrifice your retirement dreams.

Lara Mazek, CFP®

Lara provides comprehensive wealth management strategies to help people optimize their financial lives. Working closely with clients, she incorporates all elements of their lives into personalized financial plans, including investment portfolio advice, tax strategies, college savings and more. She is a CERTIFIED FINANCIAL PLANNER™ professional.