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- July 27, 2023, marks Black Women’s Equal Pay Day.
- Over a lifetime, pay inequity will lead Black women to miss out on over $900,000 that could have helped with retirement.
- Black women should save aggressively, take advantage of 401(k) and IRA options early, and advocate for fair pay.
July 27, 2023, is Black Women’s Equal Pay Day, signifying the day when Black women, after seven extra months of work, catch up to the average earnings of a white man in 2022. Black women working full-time, year-round receive 67 cents for every dollar paid to white men.
This creates a significant wage disparity impacting Black women’s daily lives (reduced funds for food, rent, and healthcare) and leading to substantially lower retirement savings. Despite Black women’s significantly increasing educational attainment, this stark gender and racial wage gap persists.
This wage gap is projected to cost Black women working full-time, year-round, over $900,000 over a lifetime of work. This $900,000, which could have funded their retirement, will be unattainable for many Black women.
A fully-funded retirement account is crucial because women typically outlive their spouses and studies indicate that women are 80% more likely than men to live in poverty after retiring.
It is important to highlight this wage and income gap, and offer strategies to help Black women overcome this disparity and plan for a successful retirement.
As the pay gap exists, what can be done to address it? Lynette Khalfani-Cox has been working to narrow the gap and offers several retirement planning tips.
1. Begin saving as soon as possible
“We know that women typically retire with less savings than men,” Cox mentioned to Insider. “The way to counter this is to start saving as early as possible.”
Many people believe they need to save large amounts of money regularly to truly save, but that is not the case. “Start saving now,” Cox continued. “Save whatever you can, just be consistent. The money you begin saving now will have more time to grow in your retirement account.”
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2. Automate your savings
This promotes the habit of consistent saving. The key to successful saving is making it a routine. “When you automate your saving, you can set it and forget it. It’s even better if you have it automatically deducted from your paycheck, so you don’t even miss it,” Cox stated. This method ensures that you consistently put money away and boost your financial stability.
3. Utilize the potential of the 401(k) and IRA
Surprisingly, some individuals do not immediately start contributing to their employer’s 401(k). “People tend to think that saving is something they can do later, but that’s not the case. The years of saving that you miss cannot be made up for, and you will see the impact on the amount of money available for retirement,” Cox emphasized.
If your workplace provides a 401(k), start contributing as soon as you are eligible. If it includes a company match, try to save at least what they are willing to match. Aim to save 15% to 20% of your gross paycheck overall.
And don’t feel restricted to a corporate employer to save for retirement. Begin funding your own retirement now by investing in an IRA. With a Roth IRA, funds are allocated for retirement after taxes, allowing your investment to grow tax-free.
4. Advocate for yourself
It’s important to advocate for yourself. Request the raises and bonuses you deserve. If you believe you are being paid less than a coworker with similar credentials and experience, speak up. In New York,“`html
Employers must disclose salary information with job postings, so you know what you should be getting paid upfront.
It’s important to negotiate well for yourself during interviews. When negotiating, it’s essential to aim for the top of the offered salary range. Your starting salary with a company sets the foundation for your future pay increases and bonuses, as well as what you’ll present to new employers when seeking a job change. Therefore, it’s crucial to negotiate for fair compensation. Black women deserve to receive the remuneration they are owed.
It’s important for everyone to prioritize saving and retirement. While retirement may seem distant, it arrives sooner than expected. This is especially crucial for Black women, as they are often paid less, leaving them with limited resources for retirement savings. The significant pay gap can significantly impact their ability to prepare for retirement, necessitating proactive steps to overcome these challenges.
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