Women are gaining personal and financial power, yet the income and savings challenges they face are real, under-represented and often misunderstood.
A new study by Merrill Lynch in partnership with Age Wave outlines the financial challenges women will face throughout their lifetimes and provides real solutions for funding the present and future. The study offers key insights built on the following observations:
The wealth gap is the greatest challenge we’re not talking about: What exactly is the wealth gap? It’s defined as the difference between women’s and men’s total sum of all sources of financial resources, including earnings, investments, retirement savings and additional assets such as property. Today, the average single woman has three times less wealth than the average single man. The Merrill Lynch study provides key learnings about how this is possible and what women can do to elevate their financial standing.
Women’s No. 1 financial regret: 41 percent of women report that their biggest financial regret is not investing more. Investing provides the opportunity for women to cultivate their wealth in ways beyond a paycheck. According to the study, 59 percent of women report that they are not doing a good job using investing to pursue their financial goals. Women say that not having the knowledge to invest is their number one barrier (60 percent) followed by not having the confidence to do so (34 percent).
Women need to plan for a 100+ year life. Preparing for a long life requires understanding the cost of retirement, building a plan to meet key savings goals and achieving those goals. The typical retirement costs $738,000, yet only 9% of American women have $300,000 or more saved. On average, women live five years longer than men. It should, therefore, come as no surprise that 77 percent of people who are widowed are women and that by age 85, women outnumber men two to one. According to the study and 81 percent of centenarians are women.
The pay gap accumulates over the course of a woman’s lifetime. When a woman reaches retirement age, she may have earned a cumulative $1,055,000 less than a man who has stayed continuously in the workforce. The study notes that for every $1 a man makes, a woman in a similar position earns 82 cents, with women of color facing even greater disparities. Sadly, these numbers do not demonstrate how the pay gap accumulates and compounds over the course of a lifetime – especially when earnings are invested. Work disruptions and interruptions – often triggered by the need to care for children, parents and spouses – greatly affect a woman’s potential earnings over her lifetime.
Read more insights and learn about important methods to address financial challenges in the full report: Women & Financial Wellness: Beyond the Bottom Line