4 Struggles Women Face in the Financial World

It wasn't long ago that women weren't allowed to have credit cards. Financial inclusion for women has made progress in the past fifty years, but there is more work to be done. Women are still facing a few unfair disadvantages in the job market and in the world of banking, saving, and investing.

Let's look at a few of the biggest obstacles for women in the financial world -- as well as signs of hope for the future

1. Women get paid 17% less than men do

Most of women's disadvantages in the financial world boil down to one big problem: the gender pay gap. Women get paid less money than men. According to the latest data, U.S. women get paid about $0.83 for every dollar that men earn. That means women's pay is about 17% lower than men's income.

2. Women have 68% less wealth than men do

Lower pay makes it harder for women to save and invest. No matter how cleverly you manage your budget, it's going to be a struggle to invest as much money as someone who's earning 17% more than you.

It's no wonder that the gender pay gap has also created a gender wealth gap: a single woman has an average wealth of about 32% of a single man's average wealth. The average U.S. woman has a net worth (personal assets minus liabilities) of $5,541, while the average U.S. man has a net worth of $12,188.

Gender wealth gaps are even more severe for Black and Latina women. As of 2019, for every dollar of wealth owned by households headed by white men, families headed by Hispanic women had $0.10 of wealth, and Black women had only $0.05 of wealth.

3. Women's retirement income is about 70% of men's

Because women earn less income and are more likely to take time away from the paid workforce to be caregivers for children or family members, it's harder for them to build up a big nest egg for retirement. As a result, women's retirement income from all sources (including Social Security and investment accounts) is about 70% of men's retirement income.

Many women don't even have an employer-based retirement savings plan like a 401(k). The U.S. Department of Labor found that only 43.5% of working-age women are participating in a workplace retirement plan. One reason is that women are more likely than men to work part-time jobs that don't qualify for a retirement account. Just being able to have a full-time job that offers good benefits like a 401(k) can be a huge help for people to save for retirement -- and many women don't have this extra help.

4. Too many financial advisors don't treat women with respect

Working with a financial advisor or Certified Financial Planner™ can be a good way to boost your retirement savings and make smarter investment decisions to build wealth for the future. But unfortunately, too many financial advisors are not doing a good job of helping women feel comfortable, heard, and respected.

Research from New York Life found:

• 48% of women feel as if they're "being treated differently" or "patronized" by financial advisors
• 44% of women believe that they face inequalities in investing
• 40% of women said that financial advisors are less likely to listen to their ideas
• 40% of women said that financial advisors "push women out of financial conversations"

Financial advisors need to do a better job of listening to their clients, especially women. The investment world shouldn't be a boys' club. Not only is financial inclusion the right thing to do, but it's also good for business.

Signs of hope for women in investing

The financial news for women is not all bad -- despite these disadvantages, there are many signs of hope. Women are becoming more likely to buy stocks and invest for retirement, and they're often really good at it.

Women are buying stocks

As of 2023, according to Fidelity surveys, about 60% of women were investing in the stock market, and 68% of women were saving for retirement. This is up from historic trends when only 40% of women were invested in stocks. Women are even slightly more likely than men to own stocks: 62% of women, vs. 59% of men.

Women are good at investing

Despite the arrogant attitudes of some patronizing financial advisors, women tend to outperform men at investing. Studies show that women tend to achieve higher investment returns than men do while taking less risk -- they're less likely than men are to buy into speculative investment fads, they trade less frequently, and they stay level-headed during market ups and downs.

All of this adds up to an extra 0.4%–1.0% of average annual returns for women. Even though women tend to start with a smaller income and a smaller net worth, they tend to be better at the actual work of investing than most men are.

Bottom line

The world needs more women investing. It's true that women face unfair disadvantages in the workplace, and women deserve better support as caregivers and in their careers. Companies and governments can do more to support families (such bringing back the expanded Child Tax Credit) and creating a level playing field at work with pay transparency.

But there are many optimistic signs that women are getting better at playing the long game of investing. If America can make progress toward ending the gender pay gap, women are doing the right things to eliminate the gender wealth gap next.