4 ways Black women can counteract pay inequity in retirement.
4 ways Black women can counteract pay inequity in retirement.
Overcoming the Gender and Racial Wage Gap: Tips for Black Women to Secure a Successful Retirement
On July 27, 2023, we commemorate Black Women’s Equal Pay Day. This day symbolizes the moment when, after seven months of extra work, Black women finally catch up to the average earnings of a white man in 2022. Unfortunately, this achievement is overshadowed by the harsh reality of a persistent and staggering gender and racial wage gap. Black women, working full-time and year-round, are paid only 67 cents for every dollar earned by white men[^1^].
A Costly Disparity
The impact of this pay gap extends far beyond daily expenses, affecting Black women’s ability to save for retirement. The pay disparity translates into a lifetime loss of over $900,000 for Black women, funds they could have utilized to secure a comfortable retirement[^1^]. Women typically outlive their spouses, and studies reveal that women are 80% more likely than men to live in poverty after retirement[^1^]. Thus, addressing this wage and income gap becomes vital for securing a prosperous future.
Bridging the Gap: Tips for Planning a Successful Retirement
To combat the gender and racial wage gap and ensure a financially stable retirement, it is essential for Black women to actively engage in strategies that maximize savings and advocate for fair compensation. Let’s explore some tips from financial expert Lynette Khalfani-Cox to achieve a successful retirement journey:
1. Start Saving Early
Saving early is a key step in overcoming the wealth gap. It’s a common misconception that substantial savings are required to begin a retirement fund. Cox emphasizes the need to start saving as early as possible, regardless of the amount. By doing so, the money invested has more time to grow, leading to a more substantial retirement account[^2^].
2. Automate Your Savings
Consistency is crucial when it comes to saving. To establish a savings habit, automate your contributions. By setting up automatic transfers from your paycheck to a retirement account, you remove the temptation to spend that money elsewhere. This approach ensures a consistent and reliable method of building financial stability[^2^].
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3. Harness the Power of 401(k)s and IRAs
Maximizing the benefits of employer-sponsored retirement plans, such as a 401(k), is vital. Cox emphasizes the importance of contributing as soon as you become eligible and taking full advantage of any company match offered. Saving 15% to 20% of your gross paycheck is a good target to aim for. Additionally, investing in an Individual Retirement Account (IRA), specifically a Roth IRA, enables tax-free growth of your retirement funds[^2^].
4. Advocate for Fair Compensation
A critical step in combating the wage gap is advocating for fair compensation. If you believe you are being underpaid, don’t hesitate to speak up. Research your market value and use salary information disclosed in job postings to ensure you’re receiving what you’re owed. Negotiating well for yourself at the beginning of your career sets the stage for future salary growth and opportunities.[^2^]
Taking Charge of Your Financial Future
It is essential to prioritize saving for retirement and closing the wealth gap as soon as possible. While retirement may seem distant, time passes quickly, making early action crucial. This holds even greater importance for Black women, who face lower pay and reduced resources for retirement. By implementing these strategies and advocating for fair compensation, Black women can eliminate barriers and safeguard their financial well-being well into the future[^2^].
Remember, the gender and racial wage gap is a significant issue that requires continued attention and action. By working collectively, we can create a more equitable society where equal pay and financial security are a reality for all.