3 Reasons Middle-Class Women Need Different Money Strategies Than Men
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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A recent TruStage survey of Americans with a household income of $55,000 to $160,000 found that middle-class women are not faring as well as men financially. Fewer women rank their current financial situation as “good” (64%) compared to men (85%). In addition, women are less likely to feel prepared for retirement, with 42% saying they aren’t prepared compared to 22% of men.
In this “Financially Savvy Female” column, we’re chatting with Tammy Schultz, EVP at TruStage, about the reasons middle-class women need different money strategies than men, and what those strategies are.
The Gender Pay Gap
Women tend to make less money than men, which can have significant financial consequences.
“The lingering gender pay gap demonstrates the limitations on women’s earning potential, directly impacting their ability to save and invest,” Schultz said. “Statistically speaking, we are also more likely to take career breaks or reduce work hours for familial responsibilities, disrupting income flow and long-term financial planning.”
An Urban Institute study reports average lost lifetime earnings of $295,000 — 15% of potential earnings — for mothers due to caregiving.
To combat the effects of the gender pay gap, Schultz recommended the following strategies:
- Engage with financial advisors: “The data shows that 52% of women haven’t met with a financial advisor compared to just 37% of men. Building a relationship with a trusted advisor can help you create personalized strategies and gain confidence.”
- Consider independent financial fluency: “Forty-three percent of women report preferring to handle their finances independently, which can be a cost-effective approach. By participating in workshops, online courses and community programs, you can better understand budgeting, investing and retirement planning, giving you confidence to manage your finances autonomously. By regularly tuning into a reputable financial podcast or news outlet, you’ll start to increase your understanding and confidence in finances.”
- Stay curious: “No matter what resources you choose to use, stay eager and ask questions. This is a rapidly changing economy, so asking questions from trusted sources is essential to building your knowledge base and confidence.”
Less Access to Retirement Savings — and Greater Need
Beyond earnings, retirement planning presents another hurdle.
“Women tend to earn less over their lifetimes, experience lower levels of access to employer-sponsored retirement plans because of employment status (part-time work or less senior roles) and live longer than men,” Schultz said. “The compounded impact of these factors means women require more savings to sustain a longer retirement, and many have fewer opportunities to earn the income they need.”
Schultz recommended that women take action to set themselves up for a brighter financial future:
- Start saving early and consistently. “Although small, recurring contributions may seem insignificant, they can grow savings significantly over time.”
- Take advantage of employee matching programs like 401(k) plans and contribute enough to get the full match. “Otherwise, you’re leaving money on the table.”
- Consider alternative retirement vehicles. “Explore annuities — specifically registered index-linked annuities, indexed loan agreements that invest against life insurance cash value, individual retirement accounts, Roth IRAs and other individual plans. Women and men often have different risk tolerance, so these options can supplement retirement income while still providing security and protection as you build confidence in further investing.”
- Consider safety nets when you need them. “If budgets are tight but you need to make a big purchase, like a vehicle, ask your lender about payment protection insurance on your loan. If a life event happens, not only is your loan (and car!) protected, but your long-term financial goals can stay on track.”
Household Cost Burden
When it comes to day-to-day expenses, women often shoulder more — women are more likely to cover the costs of household needs, like groceries and healthcare. This means they may feel the effects of inflation even more than men — the TruStage survey found that 67% of women report spending more and saving less due to inflation compared to 53% of men.
“It’s important for women to take a step back and assess their financial situation,” Schultz said. “If you are facing legitimate financial limitations, evaluate your spending habits and make difficult choices. This points to the need to build an emergency fund when times are good to handle any surprise costs.”
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