The Gender Gap Is Real: How To Avoid Its Pitfalls by Kristin O’Keeffe Merrick



I had a realization recently that I spend a great deal of time telling my readers how to do things—how to prepare for marriage or a baby, how to save more money, etc.—but I haven’t spent enough time on explaining the “why”. Why should you be financially responsible? Why should you start saving for retirement? I often assume that everyone knows the “why” but the more people I speak to, the more I realize that many do not know why planning for one’s financial future is so important. Allow me to take the next few paragraphs to adequately scare you and then we can focus on some ways to approach the problem.


You need to save for retirement because if you don’t you will not have any money to live on when you retire. It is a pretty basic concept. Our Social Security program is challenged and it is difficult to say if our government will be able to guarantee its existence for future generations. In addition, pensions are becoming a thing of the past. If you do not save for retirement, you may find yourself broke and without any safety net.  If you have no retirement savings, it may be difficult to retire. It’s fairly simple. But retirement becomes a bit more nuanced when it comes to a woman planning for retirement versus a man.


Women Need To Save More Than Men To Achieve The Same Level Of Retirement Savings: You are not shocked by this. We all know that there is a very real gender pay gap in this country. There is also a serious gender retirement gap. According to TIAA, if Susie and Jimmy both make the exact same salary, Jimmy has to save 10% of his income for retirement but Susie has to save 18%. There are three widely cited reasons for this:


  • The Gender Pay Gap: Women make less money than men. Per the US Census Bureau, women make 78 cents to every dollar a man makes. Professional women fare much worse. They make 72 cents for every dollar a professional man makes.

  • Women Work Fewer Years Than Men: According to Pew Research Center, men spend an average of 38 years in the workforce, whereas women spend 29 years. This nine-year gap means that women work 75% of the years that men work. The “why” is not a mystery. Women take several years off to care for children and elderly parents whereas the average man does not.

  • Women Are More Risk Averse: Women take fewer investment risks than men and tend to allocate their investments towards “safer”, lower yielding assets. Overtime, this can have a significant drag on one’s retirement portfolio. According to TIAA, women hold about 5% more cash in their portfolios than men.


There Is Another Reason: In my opinion, there is another alarming reason for the retirement gap. It lies in the fact that women generally put their own needs very low on the list of things they need to tend to. I work with all types of women—executives, business owners, attorneys, stay-at-home moms. The common thread among these amazing women is that they spend 95% of their time doing things for other people. That remaining 5% is spent on basic survival needs like eating, sleeping, personal maintenance and perhaps some socializing. What does that mean for her personal finances? It means that she has generally neglected the entire topic. It means that she has not saved or invested enough. It means that her 401(k) from her job eight years ago is either being completely ignored or is invested in questionable investments, earning almost nothing. It means that she has no outlined targets or goals and has not created any kind of financial plan. It means that she will have to save 8% more than a man to achieve the same level of retirement savings. In addition, women have a longer life expectancy than men so they need more money for retirement because they will be on earth longer.  



How To Close The Gap: This is an interesting issue for many reasons. Topics like the gender pay gap are incredibly hard issues to solve. But what you can do is acknowledge the issue and start planning for it. Knowing that you face these hurdles is half the battle. The other half of the battle is doing something about it. Here is my advice:


  • Seek Professional Help: Ask friends or family for recommendations for a Financial Advisor who can help you get on track. An Advisor can help you identify areas of concern and create a strategy for you.

  • Start Saving For Retirement: If you have an employer sponsored retirement plan (401(k), Simple IRA) that is available to you, start making contributions. If you do not have one, open an IRA and start making contributions to that. Make sure it is invested and not just sitting in cash. If you have an old 401(k)s out in the universe, go find it and make sure it is invested properly. If you want someone to actively manage it for you, it might make sense for you to find a Financial Advisor to help you.

  • Make A Date With Your Finances: Everyone is busy these days. That is not an excuse to neglect your financial future. Put a recurring event (monthly or quarterly) on your calendar to force yourself to do a financial checkup.


Perhaps I should be more explicit in my closing. You cannot rely on someone else to save for you, plan for you or invest for you. Take the initiative and start focusing on this today. You know you have some headwinds to face but armed with the information, you will be just fine. And while you are getting financially organized, maybe ask for a raise too! Kill both the gender retirement gap and the pay gap at the same time!


Kristin O’Keeffe Merrick is a money expert and financial advisor at her family-run firm, O’Keeffe Financial Partners, in Fairfield, NJ. Kristin works with families, business owners, non-profits and creatives to devise bespoke financial plans and to help clients work towards achieving their money goals. Kristin also speaks and writes about financial literacy. She is a contributor to Forbes and Girlboss and has been featured on the Today Show, Real Simple, House Seven and My Domaine.



Views expressed are not necessarily those of Raymond James Financial Services and are subject to change without notice. Information contained herein was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature,and is not a complete statement of all information necessary for making an investment decision. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. Diversification does not ensure a profit or protect against a loss. Dividends are not guaranteed and a company's future ability to pay dividends may be  limited. Investors should consider the investment objectives, risks, and charges and expenses of an exchange-traded product carefully before investing. A prospectus which contains this and other information about these funds can be obtained by contacting Kristin Merrick. Please read the prospectus carefully before investing. Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. O'Keeffe Financial Partners, LLC is not a registered broker/dealer and is independent of Raymond James Financial Services.

 ABOUT                      CONTRIBUTORS                   NEWSLETTER                       CONTACT                       ADVERTISE                       GIVE                                 FAQ   

© 2020 Bergen County Moms, LLC. All rights reserved.  

  • Pinterest - Black Circle

DISCLAIMER: We do not endorse or otherwise warrant the quality of business featured. The views, opinions and advice expressed on this website are solely those of the original authors and individual contributors alone and designed for educational purposes only, not to provide medical advice, diagnosis or treatment, and do not necessarily reflect those of Bergen County Moms, LLC, its members, writers, funding agencies, clients or staff.