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Media outlets across the Baltimore-Washington metropolitan region are currently recognizing some of the most influential and powerful women in the area, acknowledging and praising achievements in many fields. To learn about these leaders is inspiring and illustrates women’s myriad contributions to society. Such progress fuels hope for continued advancement and its positive implications for our communities.

For those of us in finance, the progress is evident in the shifting demographics of our client base. We serve increasing numbers of women with increasing economic muscle. Women have come far, and a rising tide lifts all boats.

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Yet, a gender wealth gap remains between men and women. The wealth gap, a consequence of realities women face throughout their lives, leaves women experiencing financial hardship and distress at a disproportionately higher rate than men. Financial hardship is often a precursor to emotional distress and physical ailment, with cascading negative implications. Thus, while women have come far, the journey is not over.

Life’s vicissitudes (divorce, single parenthood, caring for aging parents or ill spouses, disability) and inevitabilities (old age, widowhood) can wreak havoc — practical, economic, emotional and physical havoc. But the wealth gap has the potential to, and often does, increase the havoc for women. Raising awareness about this issue and catalyzing remedial action (both individual action and action by policy makers) can mitigate this burden and benefit us all. After all, the burden is not exclusively borne by the individual; it ripples through families and communities.

What is meant by the gender wealth gap? It refers to the difference in accumulated financial resources between men and women. A recent study cited by Barron’s concluded that the lifetime gender wealth gap could translate to a difference of greater than $1 million in accumulated wealth. While the actual dollar amount will vary by individual and circumstance, the gender wealth gap exists across the socioeconomic spectrum.

Why is there a gap? There are a number of contributing factors. One significant reason is that women, by choice or necessity, assume the lion’s share of family care giving, either staying home to raise children or interrupting careers to care for children, grandchildren, aging parents and spouses. Intermittent work translates to less accumulated social security and less retirement savings in 401K and pension plans. And while non-working spouses may be entitled to a portion of future social security and pension/retirement streams earned by working spouses, the unfortunate reality is 40% -50% of marriages in the U.S. end in divorce. Divorce can take a heavy toll on the finances of both spouses, but typically more on women who stayed home to raise children. Years out of the workforce likely means re-entering at a lower salary level in the same industry or accepting any job to pay the bills. According to a report by the U.S. Government Accountability Office, women’s household income decreased 41% post divorce — almost twice the decline that men experience.

The income gap between men and women results in women earning approximately 80% of that earned by men. (Of recent note: Just six of the 100 highest paid executives recently listed in Baltimore Business Journal were women.) A 20% income differential, compounded over a lifetime, translates to significant accumulated wealth differential. While understanding all the causes of gender income disparity is essential before drawing conclusions about pay equity, we know that the gap exists and places many women at financial disadvantage. Moreover, women’s orientation around money is more likely to be focused on earnings and a living budget, and less likely to be focused on strategic financial planning and long-term investing. And yet true wealth accumulation is more a function of learning about how to put your money to work for you, and less a function of managing a short-term budget.

Finally, women in the U.S. live an average of five years longer than men. This “longevity factor” means assets must last for a longer time frame for women. It also means women are more likely to need long term care (70% of nursing home residents are women).

This confluence of events — care giving, systemic income disparity, societal realities, longevity — contributes to the gender wealth gap, with women experiencing some form of financial inequity in their lives in disproportionate numbers. In fact, women consistently name financial hardship as a major life concern, and in women over 50, fear of financial dependence is ranked a top fear. Many worry about outliving their savings or being a burden to loved ones in retirement. That fear causes anxiety, and it can compromise physical well-being.

Let us continue to recognize and congratulate the female leaders who elevate the collective. But let us also work to increase financial security for individual women, leading to healthier people, families and communities.

Cynthia Kuncl (cgkuncl7@gmail.com) is a financial services consultant based in Howard County.

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