Women, Finance and the Pink Tax
Let’s say you have two razors, identical in every way except one is blue, and one is pink. With all other factors considered, you would think the two razors should have the same price tag, but they don’t. The pink one is more expensive.
The “pink tax” is a phenomenon of which we are all too aware. The Department of Consumer Affairs reported that on average products targeted to women are 7 percent more expensive than products targeted to men, with the price gap nearly double for personal care.
We know that women earn 80.7 cents on average for every dollar men earn, and it’s even lower for women of color, meaning women pay more for goods and services while making less. This income disparity impacts women’s ability to put significant reserves towards retirement and reduces future Social Security benefits.
Furthermore, women typically serve as primary caregivers. This responsibility oftentimes calls them away from work, which can make them ineligible to contribute to an employer-sponsored retirement plan and increase healthcare costs.
To put a cherry on top, women outlive men by an average of 5 years. According to the Bureau of Labor Statistics, households run by people age 65 or older spend about $58,860/year. Women need about $294,000 extra (not counting inflation) to account for their solo golden years.
This boils down to one critical issue: women carry many financial responsibilities, but their resources, such as income and time, may be limited.
The good news is that women are increasingly their family’s breadwinner and are earning more advanced degrees than their male counterparts. But with increased financial security comes increased responsibility. Accumulating cash in a savings account will not sufficiently keep up with the increased costs of goods and services over time. Inflation means current cash reserves lose purchasing power over time. Investing is how wealth is built.
Of course, investing has inherent risk. It is important to understand what you own and why. This takes a certain level of commitment to understanding not just the basics of investing, but also the appropriate expectations for your investments to fund your goals.
At Pathfinder Wealth Consulting, we believe that a comprehensive financial plan is the best way to make sure your investments align with your financial goals. Building wealth starts with an investment plan that is diversified and consistently followed, with adequate cash flow planning to ensure you don’t need to tap into your resources prematurely. Financial planning will bring guidance, peace, and confidence to those investment decisions.
Many women feel confined by financial pressures, not knowing what to do. At Pathfinder, we know there is a better way. We are motivated by the fact that money gives people choice. Freedom and confidence can be found in wise money management and financial planning. As 2019 comes to an end, we encourage you to start 2020 by making financial-savvy decisions for the next decade and beyond. If you have questions about investing in your future, please reach out to us at 910-793-0616 or visit our website for more information.
This Insights article is contributed by Kayla Willliford Johnson, Financial Planning Associate at Pathfinder Wealth Consulting.