The job losses incurred during the COVID pandemic impacted women disproportionately. As the nation begins to emerge from the economic downturn, Retirement Director Sara Tegethoff Lowery discusses how women can regain their financial footing and get back on track to their long-term goals.

I recently watched an interview with U.S. Commerce Secretary Gina Raimondo that happened to air on Mother’s Day on a major network’s Sunday morning program. The disappointing April 2021 jobs report had just been released, and Secretary Raimondo was asked for her thoughts on the particular challenges facing women in terms of reentering the workforce.

– C. Nicole Mason, president and chief executive of the Institute for Women’s Policy Research

Women have taken a step backward due to the very nature of the pandemic and how it affected the functioning of many households. Parents suddenly found themselves working from home full time while also trying to supervise children who were struggling to navigate remote schooling. Amid this upheaval, many families decided it was necessary for one parent to quit their job to prioritize schoolwork and minimize distractions for the other working parent. And more often than not, it was women who stepped into this role.

Women have always been more likely than men to leave the workforce to care for children or an aging relative. But this time, it was not a voluntary decision but rather a desperate attempt to restore normalcy amid an unexpected, life-changing crisis.

Recovering from the Shecession

As more people are vaccinated against COVID-19, we are beginning to glimpse the end of this crisis and the start of an economic recovery. But what will it take for women to participate in that recovery? Having taken an outsized step backward, will it be more difficult for us to move forward and fully emerge from this prolonged shecession?

In any circumstances, staying out of the workforce for an extended period of time – say, 28+ weeks – makes finding a job much harder. The longer we’re out of work, the greater the impact to our long-term job prospects and, ultimately, our financial security.

And the pandemic may have exacerbated that situation for women specifically.

We also can’t ignore the fact that women are still up against a gender pay gap that has been in place long before the pandemic: In the first quarter of 2021, median weekly earnings for women working full time were roughly 83% that of their male counterparts.⁴ Thanks to that disparity, the average woman would need to save $1.25 for every $1 a man invests in retirement savings to build an equivalent nest egg.⁵ With women’s life expectancy currently at 81 years, that means we must either build up more savings or keep working.

While working past the traditional retirement age can be a good thing, many of us would prefer to have the flexibility to do other things and continue to work because we want to – not because we have to.

It’s Time to Start Paying Yourself

I realize I’ve just painted what probably feels like a dire picture of our current situation. My intent was not to discourage women, but rather to be frank about the realities we’re facing so we can start tackling those challenges head on. I’ve personally witnessed tremendous resilience on behalf of so many women through this pandemic, and I think we owe it to ourselves to make a plan to make the most out of retirement – or whatever our future may hold.

That plan starts with reframing your savings efforts to paying yourself instead. With that mindset, following are what I believe to be the key steps to building – or rebuilding – financial security.

Create a Budget. For anyone trying to save for the future – male or female, millennial or baby boomer – putting together a budget is a necessary first step. Base your budget on your take-home pay (i.e., the money you have after taxes have been taken out). Divide your spending into three categories: Needs (nondiscretionary spending), wants (discretionary spending) and savings.

I recommend allocating 50% of your budget to needs, 30% to wants and 20% to your savings. Your needs include things like your rent/mortgage, groceries, cell phone and transportation. Wants include vacations, dining out, gym memberships and clothing.

Your savings should incorporate your retirement plan, including deferring enough to capture your employer’s match, if they offer one. This category should also cover an emergency savings fund, additional payments to your credit card or student loan debt, and any payments you’re making toward other financial goals, such as a down payment toward a mortgage.

Pay off Debt. Carrying a balance on a credit card is giving money away instead of paying yourself. Credit card balances also impact FICO scores – the number that determines your credit worthiness. If you have a low credit score, it will cost you more money to borrow money, which can perpetuate an ugly cycle. So, as part of your savings budget, be sure to allocate adequate funds to paying off as much debt as you’re able each month.

Establish an Emergency Savings Account. Set a manageable goal – say, $500 – that you can set aside and not use unless absolutely necessary (and if you do need to tap into it, be sure to replenish it as soon as you can). I like to tell people to give the account a name they have an emotional connection to, such as “Never Going to Be Broke Again.” It might be a good idea to hide these funds from yourself by depositing the money at a bank that’s separate from the one you do the rest of your banking with (just be sure to review the fees associated with the account so they don’t eat away at your savings). When you reach your goal, celebrate. Then, set another goal. That first goal is the hardest to reach.

Educate Yourself About Investing. Studies show that women make better investors than men. We are less emotionally reactive to changes in the market, so we tend to trade less frequently, which means we incur fewer fees.⁶ But that doesn’t mean we couldn’t all benefit from building our investing knowledge. Whether you prefer to read articles, listen to podcasts or watch videos, there is a wealth of resources online – and a growing portion of this content is being created by women, for women. Just make sure to do some research on the source to make sure it’s reliable before you delve too deeply.

I recognize that following these steps may be challenging, especially if you’re one of the millions of women who lost a job during the past year and are now preparing to reenter the workforce. Saving money, sticking to a budget, learning how to invest wisely – these all take discipline. But as we emerge from this economic downturn, I would urge you to focus on paying yourself. Because we all deserve to be paid well.

Women and Wealth

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¹CBS News, “Transcript: Secretary Gina Raimondo on ‘Face the Nation,'” May 9, 2021.
²Center for American Progress, “When Women Lose All the Jobs: Essential Actions for a Gender-Equitable Recovery,” February 2021.
³BBC, “Why this recession disproportionately affects women,” October 2020.
⁴Bureau of Labor Statistics, “Usual Weekly Earnings of Wage and Salary Workers, First Quarter 2021,” April 16, 2021.
⁵PlanSponsor, “Pay Gap Means Women Need to Save More for Retirement,” January 2017.
⁶Forbes Advisor, “Why Women Are Better Investors,” March 30, 2021.