When I was a kid, one of my favorite toys was my Day-to-Night Barbie. Armed with a briefcase, Barbie wore a pink power suit that could be turned into a sparkly cocktail number for her happy-hour date with Ken.
Like practically all of my friends back then, I had a stay-at-home mom. So this working woman Barbie doll seemed particularly exotic. “We girls can do anything” was Barbie’s slogan back then. And that included having a career.
The sad reality that I didn’t understand was that back then in the 1980s, women on average earned 40% less than their male counterparts earned. That seems unconscionable today. How can you pay someone 60 cents on the dollar for doing the same job?!
Luckily, the gender pay gap is getting narrower, but it still exists. According to research by PayScale, in 2019, women made 98 cents for every dollar made by a male equivalent.
The big problem is that, although the pay gap is shrinking, the rate at which it is shrinking is slowing. PayScale reports that since 2015, the gap has shrunk by only $0.008. According to the World Economic Forum, parity won’t be reached for nearly 100 years.
How Can We Fight the Gender Pay Gap?
First off, let’s all agree that the gender pay gap is not the fault of women. Some folks like to explain it away as being a confidence issue. Women aren’t asking for raises, they say.
As Sallie Krawcheck, founder and CEO of Ellevest, remarks, that is total baloney. Women are asking for raises. They’re just not always getting them.
So how can we fight the gender pay gap? Supporting policies for a higher minimum wage is a good start. Women make up a disproportionate percentage of low-wage workers. Raising the bar will help level the playing field.
Also, salary transparency seems to play a big role. According to PayScale, women who report their companies are transparent about pay are more likely to make as much — or even more — than their male counterparts. Women who do not feel there is pay transparency at work, on average, make only 97 cents to every dollar men make.
Making sure our male spouses pull some of the weight at home helps too. Women are more likely to be on call for the family and take time off work to handle emergencies such as sick kids. So let’s split the “barf duty” and make sure the school nurse has Dad’s number too.
The Gender Pay Gap’s Effect on Retirement Savings
Of course, because we often earn less, it’s harder to save and invest money for our futures. Sadly, on average, women have only 50% of the retirement savings that men have. According to a Student Loan Hero study, roughly 50% of women don’t have any savings at all!
According to a study by Willis Towers Watson that asked nearly 5,000 American full-time employees about their financial priorities, only 44% of the women asked named retirement as their top priority. Compare that to 60% of men. Women’s top priorities were more likely to involve current financial needs, like putting dinner on the table and paying off debt.
According to Transamerica, the median retirement account balance among women is only $23,000. Compare that to the statistic that female employees expect to need a median of $500,000 saved to feel financially secure in retirement, and it’s clear we’ve got some catching up to do.
How to Effectively Save for Retirement With Robo Advisors
Until the gender pay gap is shut for good, what can we do to make up the difference?
Get started right away, that’s what!
Robo advisors use computer algorithms to create and maintain an investment portfolio specifically for your investment needs. They take into account how much money you already have saved, how much you can invest per year and your time horizon to design a properly allocated portfolio.
Although you’ll have to pay fees in return for the investment advice and management, the amount you’ll be charged is only a fraction of what you’d have to pay a traditional human advisor.
Some of the robo advisors don’t even require a minimum deposit to begin investing. So you can get started with only a few bucks.
The Best Robo Advisors for Beginners
Both of these robo advisors were pioneers in this space, and they’re both excellent choices for beginners. You can get started with Wealthfront with only a $500 deposit, and Betterment has no minimum requirement. Both services also charge only 0.25% annually of your assets under management.
For an extra fee, Betterment will even grant you access to a living, breathing human advisor if you want a more personal touch.
But it’s also definitely worth it to check out Ellevest.
Ellevest: A Robo Advisor for Women
Ellevest’s goal is to help bridge what its founder Sallie Krawcheck refers to as the “gender investing gap.” This robo advisor takes into account not only the information that Betterment and Wealthfront do but also women’s particular needs.
That means Ellevest takes into account the fact that women are more likely to take more time off work to care for the family, more likely to live longer and — yes — more likely to get paid less.
There are three pricing tiers for Ellevest:
- Ellevest Digital: 0.25%/year, with no required minimum balance. This tier gives you personalized investment portfolios.
- Ellevest Premium: 0.50%/year, with a required minimum balance of $50,000. With this level, you’ll receive one-on-one consultations with a certified financial planner.
- Private Wealth Management: Sliding fee scale, with a minimum investment portfolio balance of $1 million. Here, you’ll receive white-glove service and a dedicated team of financial advisors.
What’s more, Premium and Private Wealth Management clients will be able to speak to Ellevest’s Executive Coaches. These are women who can help coach you to better meet your career goals or even negotiate a higher salary.
There’s no time to lose — let’s get to work closing both the gender-pay and investing gaps today. By saving smart for retirement today, you can rest assured that in your golden years you can get some well-deserved rest and relaxation.
Written by Kat Peach.
View the original article at here.