Women around the world reach retirement with just 74% of the wealth accumulated by men, with the biggest disparities seen among women in senior expert and leadership roles, a new study found.
The study by insurance firm WTW found that the difference across all 39 countries ranged from 60% at worst to 90% at best. The U.S.’s gender wealth gap was just above the global average at 75%.
Women in senior positions have the largest gaps in accumulated wealth, with less than two-thirds (62%) of the accumulated wealth that their male counterparts enjoyed at retirement. This was due to the compounded effects of both gender pay gaps and delayed career paths, the study found. For midlevel professional and technical roles, the gap was still substantial at 69%, but it narrowed considerably to 89% for frontline operational roles.
“The primary drivers contributing to gender-based wealth disparity include gender pay gaps and delayed career trajectories. Additionally, gaps in financial literacy and family caregiving responsibilities outside the workplace influence women’s participation in paid employment and therefore their ability to build wealth,” said Manjit Basi, senior director, integrated and global solutions at WTW.
“It’s imperative that activities around gender diversity, equity and inclusion broaden to look at economic wealth at the end of women’s working careers. Pay is a fundamental factor that underlies the gender wealth gap, and while addressing the gender pay gap will partially close the wealth gap, it won’t eliminate it entirely,” Basi said.
Research has shown that organizations with more gender diverse workforces, as represented by women across all levels of the organization, are correlated with higher average returns. When companies have taken a holistic approach toward equal representation, they have outperformed their less diverse peers by 3.1% per year, according to research by Morgan Stanley.
Meanwhile, consulting firm McKinsey & Co. found productivity improvements and financial outperformance in companies with significant concentrations of female directors, with the converse observed where there is a lack of women in senior leadership.
A Harvard Business Review analysis found that women in business scored higher than men on most key leadership qualities, including resilience and results-driven attitudes. Women also pull ahead in motivation, bold leadership, and teamwork, the analysis found.
Among the 39 countries examined, Nigeria has the highest gender wealth gap in the study at 60%, closely followed by Argentina at 61% and Mexico and Turkey, each at 63%. The lowest gaps were in Austria, Spain and South Korea.
In the U.S., pay gaps and delayed career progression are the primary drivers of the wealth disparity between men and women. The pay gap is more pronounced in leadership roles, where the pay trajectories for women are significantly lower than men. For frontline operational roles, the pay trajectories are very similar between genders, the study found.
Though there has been increasing focus on reversing the trend of gender discrimination through the recent environmental, social and governance efforts, as well as corporate efforts to further diversity, equity and inclusion, more work remains to be done, Basi said.
“Gender inequity in wealth accumulation is under-researched and overlooked. The reality is that the wealth inequity issue and its causes and effects are multidimensional and should be studied and addressed as such,” said Basi. “By focusing on accumulated wealth atretirement, the disparity can be quantified, and actions can be taken through broader society, government and organizations to equalize wealth outcomes.”
“While no single solution alone will solve the gender wealth gap, effective leaders need to employ a range of approaches to narrow it,” Basi said.