It’s once again Equal Pay Day—the day that marks how much longer women must work to earn as much as men earned the year before—and there’s some slight progress to celebrate since the last one.
Last fall, a report released by the American Association of University Women found women earned 80 cents for every dollar paid to a man in the U.S. on average. And researchers say African-American women earn about 61 cents for every $1 white men earn, and Latina women earn just 53 cents.
A new analysis by Glassdoor finds that gender gap has narrowed slightly to 19 percent, if comparing workers of similar age, education and experience. And the Pew Research Center finds the gap is smaller still when comparing hourly earnings of both full-time and part-time workers, especially among younger workers.
Yet there’s one gap that remains stubbornly wide, and it’s one that could really cost women.
While the wage gap is starting to narrow, the gender wealth gap is gaping. On average, single women still have about one-third the wealth that single men do, according to a joint study from Merrill Lynch and Age Wave.
How is that possible?
It comes down to this: Women invest less and later than men do. And that can leave us lagging by literally hundreds of thousands of dollars—one analysis claims it could be as big as $1 million—over our lifetimes.
Some of that can be blamed on the fact that we earn less, so even if we’re investing the same percentage, the number is often smaller. But there’s more to it.
One Wells Fargo survey found only half of millennial women had even started investing for retirement compared to 61 percent of men. In the same report, seven in 10 men said the stock market was the best place to save for retirement, while just half of women said the same.
A recent BlackRock survey told a similar story: Men were more likely to choose stocks, while 71 percent of women preferred to keep more of their money in cash instruments (think: savings or money market accounts or bank certificates of deposit).
That matters because how you invest can be just as important as how much you invest in determining how much money you have later.
Leaving most of your money in a savings account means you’re often earning less than 1 percent a year on it—in fact, the average yield on a savings account is currently just 10 cents for every $100 you deposit, according to FDIC data. That’s far less than the rate of inflation. In other words, your money is actually losing value in a savings account.
Investing mostly in stocks and bonds, though, can help you stay ahead of the game. Over the past 90 years, the S&P 500-stock index has returned 9.8 percent a year, on average. The sooner women start investing some of our paychecks, the more time our money has to grow—and the more wealth, and options, we’ll have in our future.
That’s even more important since we tend to earn less and live longer than men. Women live five years longer than men on average, according to the latest Centers for Disease Control estimates. And we know that pensions are disappearing and that, unless something’s done to shore up the fund, Social Security payments could be cut as early as 2034.
Investing more and earlier, and putting more into stocks, seems pretty straightforward, right? So why are so many women wary of investing—especially in the stock market? In surveys, women say they don’t invest because they don’t think they earn enough money yet, or because they don’t feel confident or knowledgeable enough to start.
But the truth is: you can’t afford not to start investing, no matter what your income is now. And investing isn’t nearly as complicated as Wall Street would have us believe.
It’s as simple as investing in a diverse mix of stocks and bonds, meaning stocks or funds that cover different sectors (like technology, utilities and healthcare) and highly-rated corporate and government bonds. And to be prepared to weather some bumps. The stock market will go up and down, but historically it has grown significantly over time.
If you can’t afford to invest a lot now, invest a little. What’s most important is to start investing and to keep doing it regularly. Then you can invest more as you earn more—ideally, putting in 15 percent or more of your income eventually. And let your money grow until you need it. Do that, and you should have plenty to tap when you do.