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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.
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“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 …….