The Financial Impact of Pay Gaps on Women’s Retirement Savings
- On the Money Magazine
- Jul 28
- 2 min read
Samantha Loies, Payton, Senior, Fall 2024
The gender pay gap continues to affect women’s financial security, not only during their working years but also in retirement. Despite progress toward wage equality, women in the United States still earn significantly less than men. According to Pew Research, women earned an average of 82 cents for every dollar men made in 2022 (Pew Research, 2023). This gap has shown minimal change over the past two decades, leaving many women at a disadvantage when building long-term financial stability. In particular, the pay gap hinders women’s ability to accumulate retirement savings at the same rate as men, leaving women with a more unsteady future of retirement.
The Economic Policy Institute (EPI) notes that several factors contribute to this wage gap, with women often concentrated in lower-paying jobs. At the 10th percentile, women are paid 92 cents on the male dollar, whereas women at the 95th percentile are paid 74 cents relative to the dollar of their male counterparts’ hourly wages. (Economic Policy Institute, 2016). These factors mean that women miss out on critical years of income growth, reducing the amount they can save and invest. Kim Ashley, a business lawyer who has spent her career in a male-dominated field, highlights the long-term impact: “When women earn less, they save less—and that gap follows us well beyond our working years.” Ashley’s experience underscores how lost income accumulates over time, directly affecting a woman’s retirement security.
The consequences of the pay gap extend beyond current salaries. Scientifically speaking, women tend to live longer than men, meaning they generally need to rely on their retirement savings for a longer period. Yet, due to years of lower earnings, their retirement funds are often insufficient to maintain financial stability in later life. Clarissa Zhang, a financial advisor who has seen the impact of this issue firsthand, emphasizes, “The gender pay gap is very real. And it isn’t just about today’s paycheck; it’s about tomorrow’s retirement security.”
Reducing the gender pay gap isn’t only about ensuring fair pay today—it’s also about protecting women’s future. Bridging this gap would empower more women to save adequately, give them the resources for their future just as much as men are, prepare them for a secure retirement, and address an essential aspect of financial equality.
2 Stats: https://www.pewresearch.org/short-reads/2023/03/01/gender-pay-gap-facts/
https://www.epi.org/publication/what-is-the-gender-pay-gap-and-is-it-real/
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2 Interview Quotes
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Quote from my aunt, Kim Ashley (business lawyer): "I know through and through the troubles of working as a woman in a male-dominated field. When women earn less, they save less—and that gap follows us well beyond our working years."
Quote from financial advisor Clarissa Zhang: "The gender pay gap is very real. And it isn't just about today’s paycheck; it’s about tomorrow’s retirement security."
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