A woman who works full time from age 25 to 65 would have to work another 4.2 years to match the income of a man who retired as 65.
That’s just one of many findings in a new report from the Goldman Sachs Global Markets Institute, “Closing the Gender Gaps: Advancing women in Corporate America,” that advisors working with female clients may want to keep in mind. They may also want to consider the pay structure in their own firm.
Women likely will not only have less money to invest and save during their working lives, but they will also end up with a smaller nest egg even if they work longer because they will lose the benefit of some compounded gains.
Goldman Sachs reports that women on average earn about 20% less than men in an equivalent job, according to the Census Bureau, and just 2.5% of that difference can be explained by measurable factors such as job characteristics that that are captured in labor-market studies.
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Part of the unexplained gap — the 17.5% — may be due to the lack of women in highly paid senior roles, according to the Goldman report. It cites The Council of Economic Advisers, which found that women in the U.S. on average make up 56% of workers in the 20 lowest-paid occupations, but only 29% of workers in the 20 highest-paid occupations.
The financial services industry, along with health care, stands out for the relative shortage of female managers compared to female workers. About 40% of the industry’s managers are women versus about 55% of its employees.
But even a greater percentage of female high earners may not come close to filling the salary gap between men and women because that gap is actually greatest for women earning top dollar than for women earning less.
“The wage gap among high earners — meaning among women and men in the 90th percentile — is the widest and has shown the least progress relative to the level in 1976,” the report notes.