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- July 27, 2023 is Black Women’s Equal Pay Day.
- Over a lifetime, pay disparity will cost Black women over $900,000 which could be used for retirement.
- Black women need to save aggressively, take advantage of 401(k) and IRA options early, and advocate to get paid what they’re owed.
July 27, 2023 is Black Women’s Equal Pay Day, recognizing the day that, after seven months of extra work, Black women have finally caught up to the average earnings of a white man in 2022. Black women working full-time, year-round are paid 67 cents for every dollar paid to white men.
This translates into a huge pay gap that affects Black women on a daily basis (less money for food, rent, and healthcare) and results in substantially fewer dollars for retirement. This jarring gender and racial wage gap persists despite Black women’s sharply increasing educational attainment.
This wage gap will typically cost Black women working full-time, year-round, over $900,000 over a lifetime of work. That $900,000, which could be a fully-funded retirement, will be out of reach for many Black women.
A major reason why having a fully-funded retirement account is important is because women typically outlive their spouses and studies show that women are 80% more likely than men to live in poverty after they stop working.
It is crucial to shine a spotlight on this wage and income gap, and also provide steps that will allow Black women to overcome this disparity and prepare for a successful retirement.
We know that this pay gap exists, so what can you do to combat it? Lynette Khalfani-Cox has been working to bridge the gap and has several tips for planning a successful retirement.
1. Start saving as early as possible
“We know that women end up retiring with much less money saved than men,” Cox told Insider. “The way to combat this is to start saving as soon as you can.”
Oftentimes people think that they need to be able to save large sums of money on a regular basis to really save, and that is simply not true. “Start saving now,” Cox continued. “Save whatever you can, just be consistent about it. Money that you start saving now will have more time to grow in your retirement account.”
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2. Automate your savings
This builds the “being consistent” part of saving. The only way to be successful with saving is to make it a habit. “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 that way you don’t even miss it,” Cox said. By doing it this way, you can rest assured that you are putting money away consistently and boosting your financial stability.
3. Harness the power of the 401(k) and IRA
Believe it or not, some people do not immediately start contributing to the 401(k) offered by their employer. “I have found that people think that saving is something they can get around to later and it is not. The years of saving that you miss, you cannot get back, you cannot make up for it, and you will see the impact on the amount of money you have available at retirement,” Cox said.
If your workplace offers a 401(k), start contributing as soon as you are eligible. If it offers a company match, then try to save at least what it’s willing to match. Aim for saving 15% to 20% of your gross paycheck overall.
And don’t feel like you have to be attached to a corporate employer to save for your retirement. Start funding your own retirement now by investing in an IRA. With a Roth IRA, money is allocated for retirement after taxes, so your investment grows tax-free.
4. Advocate for yourself
I’m going to jump in here and push you to advocate for yourself. Ask for those raises and bonuses that you deserve. If you think you are being paid less than a coworker with the same credentials and experience, speak up. In New York, employers have to release salary information with job postings, so you know what you should be getting paid upfront.
Negotiate well for yourself. When I interview, I definitely give a salary range, but I always want to be at the top of that range. Remember, your salary when you start with a company is what your bonuses and pay increases will be based upon and will be the previous salary given when you are trying to move on to a new employer. So you literally set your current pay and future pay based on how well you negotiate for yourself. Black women deserve to get paid what they are owed.
It’s important to make saving and retirement a priority as soon as you can. Retirement may seem off in the distance, but it will be here before you know it. This applies to everyone, but for Black women it’s an even greater priority because we get paid much less, which leaves us with much less to put towards retirement. This pay inequity can drastically reduce our ability to prepare for retirement, so it’s important to aggressively take steps to overcome it.
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