Millennial women need a radical saving and wealth creation to close the salary gap and achieve early retirement. I have these tactics backed up by data.
Start a radical savings plan in your 20s
Many career-ambitious women in their 20s cannot imagine doing something as antiquated as giving up your career later in life. But data suggests that 40% of women take extended time off to take care of children, parents, or to pursue a new passion. Attitudes and priorities change when people get older. Raising children is costlier than ever. Some research even points a counterintuitive trend that high powered women are now leaving their career for scientifically sound reasons.
A 10-year break in a woman’s career can cost her as much as $1.3 million in retirement savings. It does not help that women earn less than men and live longer than men, so they are already at a disadvantage when it comes to preparing for retirement. We buy insurance for a lot of things in life. Millennial women ought to seriously prepare themselves for what life may throw them, particularly for events with a 40% chance of occurrence.
The solution: millennial women should aim to save 50% of your income and start saving as early as possible, preferably in their 20s and definitely in their 30s. It’s not ambition; it’s simply insurance because you’ll need to save radically more than an average white male just to be in the same game.
Your highly respected salary still sees a 10% gap
This story is a personal one.
I work in technology and use a website called Hired when I want to find a new job. Hired is a fascinating recruiting startup where candidates receive interview requests from interested companies, saving me a lot of time.
Hired asks every candidate for her salary expectation. At first, I set my salary number at 4% higher than my current salary. I got a few interview requests right away. But as an experiment, I changed my profile midway through to indicate that I want positions a level or two higher than my current one, with a salary 20% higher than what I make currently. To my shock, more companies reached out to me with significantly more exciting offers. I knew then I’ve been cutting myself short all this time. I started looking because I was bored at work, and I was right to be because the industry has confirmed that I am overqualified and underpaid.
My story is a lot of Millennial Women’s stories. Hired just released an article that stunningly described my personal experience at scale. It analyzed data across all the candidates and companies on Hired and found the following:
- 69% of the time, men are offered higher salaries for the same job and role.
- Companies offer women a salary 3% less than men.
- The larger the firm’s size, the wider the wage gap.
- The more experience the candidate has, the wider the wage gap.
These findings are somewhat sad to read but not terribly shocking given what we already know.
Get radical. Close the salary gap by expecting 15% higher
The surprising data point comes from candidates’ salary expectations for themselves. Hired found women set their expected salaries at $14K less per year than men. At my level, that is an 11% expectation gap on pay.