How gender equality impacts your retirement security

[UNITED STATES] In today’s evolving financial landscape, the conversation around retirement planning is more complex than ever before. Traditional methods of saving and investing often fail to consider one key factor that can significantly impact your future: gender equality. By failing to invest in gender equality, you may not only be undermining the progress of society, but you could also be hindering your retirement plans.

In this article, we will explore how gender inequality impacts personal finances and retirement savings, why it's important to invest in gender equality for long-term financial well-being, and how this investment can lead to better outcomes for both individuals and society at large.

The Link Between Gender Equality and Financial Security

At the heart of the issue lies a stark truth: gender inequality has lasting effects on wealth accumulation. The gender pay gap, unequal career progression opportunities, and gender-based financial discrimination all contribute to disparities in retirement savings and overall financial security.

According to various studies, women tend to earn less than men throughout their careers, which directly affects their ability to save for retirement. Additionally, women often face longer life expectancies, meaning they need more savings to support themselves during retirement. Despite these challenges, women are less likely to have access to high-paying jobs, which limits their retirement fund growth over time.

The numbers are stark. A study by the National Institute on Retirement Security (NIRS) found that women are 80% more likely to live in poverty during their retirement years compared to men. This is largely due to wage inequality and career interruptions, particularly for women who take time off to care for children or elderly family members. Without strong gender equality policies in the workplace, these trends will continue, further exacerbating the wealth gap.

How Gender Equality Affects Investment and Wealth Growth

When considering how gender equality ties into investment and retirement, it’s important to recognize that societal shifts toward equality can lead to better wealth outcomes for everyone. For example, investing in gender equality in the workplace by supporting women in leadership roles, promoting equal pay for equal work, and providing flexible working conditions not only benefits women but also leads to stronger overall economic growth.

J. Brewer highlights the importance of acknowledging gender equality when planning for retirement. According to Brewer, “Failing to invest in gender equality is not just an ethical concern, it’s a financial one. The long-term financial impact of gender inequality can be profound, leaving individuals without the resources they need to retire comfortably.”

By supporting gender equality, both on a macroeconomic level and within individual companies, we can close the pay gap, improve access to financial resources, and help individuals, particularly women, secure a comfortable retirement.

The Impact of Gender Inequality on Retirement Savings

Gender inequality affects more than just wages; it also has a direct impact on savings and investment opportunities. Women, on average, are less likely to have access to employer-sponsored retirement plans like 401(k)s, and they also face lower investment returns over their lifetimes due to lower income and investment capital.

In addition to earning less, women tend to have lower investment returns because they are more likely to take on caregiving roles, which can result in career breaks. According to data from the U.S. Bureau of Labor Statistics, women spend nearly twice as much time as men on caregiving responsibilities. This leads to interrupted careers and, by extension, interrupted retirement savings growth.

Brewer notes that one way to combat these issues is by creating inclusive investment strategies. “The best way to ensure long-term financial success is by investing in diverse assets, and gender equality is a crucial part of that equation,” Brewer states. “When women are empowered financially, they tend to invest more, leading to higher financial growth not only for them but also for society as a whole.”

Investing in Gender Equality to Improve Retirement Outcomes

When businesses and governments prioritize gender equality, the benefits are far-reaching. Creating policies that promote equal pay, encourage women to participate in the workforce, and support family-friendly work environments helps women build their retirement savings and reduces the risk of poverty in old age. Moreover, gender equality in the workplace can boost overall economic productivity, benefiting individuals and businesses alike.

To drive better retirement outcomes, here are a few key areas where investing in gender equality can make a significant impact:

1. Equal Pay for Equal Work

The gender pay gap remains one of the most significant barriers to achieving retirement security for women. On average, women earn less than men for performing the same work. This wage disparity directly impacts retirement savings since lower earnings mean fewer opportunities to contribute to retirement accounts.

By closing the pay gap, businesses can ensure that women have the same earning potential as men, which will allow them to save more for retirement.

2. Access to Retirement Plans

Another way to support gender equality in retirement planning is by ensuring equal access to retirement savings plans. Women, especially those in lower-paying jobs or part-time roles, may not have access to 401(k)s or pensions. This lack of access can result in lower lifetime savings and fewer resources for retirement.

Employers and policymakers can bridge this gap by offering universal retirement plans or creating tax incentives for companies to provide retirement benefits to part-time or gig workers.

3. Career Advancement Opportunities

Gender equality also involves ensuring that women have equal opportunities for career advancement. By addressing the barriers that prevent women from climbing the corporate ladder—such as biased hiring practices, the lack of mentorship programs, and gender discrimination in promotions—companies can help women build higher salaries and more robust retirement funds.

When women are promoted into leadership positions, they are more likely to have access to higher-paying jobs, which increases their retirement savings potential.

4. Family Leave and Flexible Work Policies

The ability to balance work and family life is another key component of gender equality that affects retirement planning. By offering paid family leave, flexible working hours, and other family-friendly policies, employers can help women maintain steady careers while also managing caregiving responsibilities.

These policies help ensure that women don’t have to interrupt their careers for long periods, allowing them to continue contributing to their retirement savings and maintain a consistent income stream.

The Broader Economic Benefits of Gender Equality

Investing in gender equality is not only beneficial to individuals; it has far-reaching economic benefits. According to the World Economic Forum, closing the gender gap could add as much as $12 trillion to global GDP by 2025. When women have equal access to education, healthcare, and financial opportunities, the economy thrives, creating a better environment for investment and retirement.

Brewer further emphasizes, “Investing in gender equality is not just a social responsibility but a sound financial strategy. As more women enter the workforce and build their wealth, the positive effects ripple through the entire economy, leading to higher productivity, better retirement outcomes, and a more secure future for all.”

Gender equality is no longer just a matter of fairness—it’s a critical component of successful retirement planning. By closing the gender pay gap, offering equal access to career advancement and retirement savings, and ensuring that women have the same financial opportunities as men, we can all build a more secure and prosperous future.

As individuals and as a society, we must recognize that failing to invest in gender equality is not only hindering progress but also jeopardizing our own retirement prospects. Investing in gender equality will ensure that all individuals have the tools they need to secure a comfortable and financially independent retirement.

The time to act is now. We all have a part to play in creating a world where gender equality is the norm—not just for the sake of fairness, but for the sake of our retirement and long-term financial health.