As a female and a personal finance writer, I find it interesting when reports looking at women and money are released. Recently, a report called “Women in America: Indicators of Social and Economic Well-Being” was released by the White House. It offers some interesting information about how women make money these days, a considers the trends associated with women and money.
The bottom line from the report, as far as women’s overall financial health is concerned, is that women live longer than men, on average, but they also tend to earn less (in spite of financial progress over the years) over their lifetimes. The result is that women have fewer financial resources as they age — and they live longer in those circumstances.
Why Do Women Earn Less Over Time?
The reasons that women earn less over time has a lot to do with the careers they choose, as well as the roles they fill in society. According to the report, women are less likely to work outside the home than men are. Additionally, those women who do work outside the home are more likely to work part-time than men — and more likely to take time off to care for children and elderly dependents.
In most cases, this means that there aren’t many opportunities for women to earn enough to last them in retirement. (I’m in more fortunate circumstances; I don’t work outside the home, but I’m still the primary breadwinner with my freelancing business.) Some of this disparity could be overcome with a spousal IRA, in which working spouse makes contributions to an IRA set up for a non-working spouse. The fact that women miss out on earning money due to their roles can cause problems later in life if her partner isn’t properly insured, or if there are issues associated with transferring assets.
And, of course, if a marriage or other partnership arrangement dissolves, that can cause even more problems for a woman who has spent most of her time working part-time, or taking care of the home. I’m not saying that it’s a bad thing to stay home and raise your children; however, you do need to look at the realities of the situation, and realize that it puts you at more financial risk. You need to take steps, whether it’s with some sort of financial agreement to protect you in divorce, or whether you have your own money set aside and adequate life insurance for your partner, to ensure that your financial future is safe when the time comes.
Another interesting point is that of education. The report points out that more women are obtaining degrees than men now. However, fewer women than men earn degrees in higher-paying fields like engineering. One of the reasons that women, overall, only make 80% (in 2009) of what men, overall, make is due to the fact that women are in careers that offer lower compensation. As you consider your career path, it might be worth it to look into higher-paying options. You will earn more over your lifetime, and be more financial sound.
What do you think? Do women need to do more to improve their financial stability?
Photo credit: meddygarnet