How Prenups Can Help Close the Gender Wealth Gap

Jun 24, 2022 | California Prenuptial Agreements, Finances, Prenuptial Agreements


You have probably heard of the gender pay gap. As of late, it has been a popular topic, especially considering that the difference in men’s and women’s earnings hasn’t changed much over the decades – crazy right? Research shows that currently, women make just 84% of what their male counterparts do. However, it goes much deeper than that. Getting paid less adds up, meaning there is a difference in how much money women have compared to men. This is known as the gender wealth gap. 

What is the Gender Wealth Gap, and How Does It Compare To the Wage Gap? 

The gender wealth gap compares how much money women have saved up over time compared to men. Alternatively, the gender pay gap looks at how much female employees make compared to the men they work alongside in terms of cents on the dollar. Both of these things are concerning, whether you’re a female making less each paycheck or don’t have as much in the bank as your male coworkers. But when retirement rolls around, it’s the gender wealth gap that has the biggest impact. 

In an unsurprising turn of events, the gap is often because women typically accumulate less wealth than men, especially if they take a leave of absence to have or raise children,  and this adds up (or should we say doesn’t add up in her bank account) over time. At the most basic level, fewer years put into the job usually equates to a lower wage and less accumulation of assets. 

There’s not a ton of data out there about the gender wealth gap. One survey found that for every dollar of male wealth, females reported just 55 cents. For most people, it’s easy to see the difference when comparing paychecks, dollar to dollar; comparing bank accounts or savings over a long time can be much harder. 

Why Is There a Gender Wealth Gap Anyways? 

The Gender Pay Gap 

It’s no secret that women have long earned less than men. The gender pay gap is usually cited as one reason for the gender wealth gap; I mean, if you’re making less you’re probably saving less too, right? Would you believe that some of the highest-paid occupations have the most considerable gender earning gaps? For example, male pilots make a base pay of $78,627, 26.6% more than female pilots but they both likely had similar education and experience. Aside from careers, entire industries can boast shocking wage gaps. In the finance and insurance industry, number-crunching women earn 77 cents for each dollar a man makes. 

In most cases, careers and industries with the most significant gaps are male-dominated to begin with (harkens back to the time when the only job women could have was a secretary or teacher). Remember those airplane pilots? Well, women only make up around 7% of all certified airplane pilots. The widest gaps between how much a woman makes on the dollar for every one man earns can also be broken down by race and ethnicity and are as follows

  • Latinx women: 49 cents on every dollar
  • AANHPI women: 75 cents on every dollar
  • White women: 73 cents on every dollar
  • Black women: 58 cents on every dollar
  • Indigenous women: 50 cents on every dollar

Looking at these numbers, some might say, “So what, it’s only a 25 cent difference?”. But that adds up! Let’s say Jane makes $35,838 a year while John, in the next cubicle over, makes $49,389. That’s a whopping  $13,551 per year difference;  $542,040 over the average forty year career period! 

Career Interruptions 

Women have children; it is a well-known fact. However, many don’t think about how having children and caring for a family can impact their career in the long run. Usually, it’s the woman who takes time off work to recover from having a child (as she should) but unfortunately, paid parental leave isn’t always offered. Then, it’s commonly the woman who ultimately extends her leave to care for her kids as a stay home mom. 

While there is nothing wrong with maternity leave or being a stay-at-home mom, employers don’t always share the same sentiment; seeing women as less committed to their job which can equal fewer opportunities and less pay raises (boo!).

Today, this is known by the quaint little term, the “motherhood penalty” and it costs women $16,000 per year in lost wages. There have even been studies and graphs that show a woman’s earnings taking a nosedive, like a seagull swooping down for a french fry, after the birth of her first child. Meanwhile, her male counterparts’ wages keep climbing and climbing. 

As the years pass, most women’s salaries never recover, leading to an ever-widening pay gap. 

Why “Leaning In” is Problematic 

While it was once said that women should “lean in” more, society doesn’t make it easy for them to do so. All one needs to do is take a look at the effect of the recent pandemic. Who was expected to stay home, watch the kids, become a pseudo-teacher, take care of household responsibilities and manage to still be at their work-from-home desk eight hours a day? Women. Even without the pandemic, typically women carry the roles of juggling home and work responsibilities with little support of flexibility from their careers. 

With work-life balance out of reach for most, many females have left the workforce entirely. 

In fact, in 2022, women’s participation in the workforce was still below pre-pandemic levels at just 58%. Until companies get it together and institute some pro-women policies, we don’t have the capacity (or the desire) to “lean-in”. As former First Lady Michelle Obama said, “… it’s not always enough to lean in because that shit doesn’t work all the time.” 

Why Should Women Pay Attention to the Wealth Gap When Considering a Prenuptial Agreement? 

Women who have just started their careers, don’t have children, and are thinking about marriage may not consider how the gender wealth gap can affect their decision to have a prenup. But it is something that should not be overlooked! 

Take alimony for example, alimony is a person’s financial support to their spouse after divorce. Frequently, alimony is given so the spouse can maintain their lifestyle during the marriage. Ten years ago, Massachusetts passed the Alimony Reform Act. This Act focused on how long a couple was married and the highest earning spouse’s income amount. In the most basic sense, it considers the length of the marriage and doesn’t drill down to look at the unpaid contributions of the spouse who was not earning during that time. Considering it maxes out at social security age, a woman in a fifteen-year marriage who did not work during her prime career period can expect to receive alimony for ten years – at most. A couple-year leave from the workforce might not be a big deal, but a ten or fifteen-year gap could undoubtedly make a difference. And, though the alimony recipient gender is shifting slightly, in most cases, the spouse receiving alimony is the woman. 

That was a lot of words; here’s an easier to decipher example:

Let’s say that Brad and Susan were married for ten years. In the first year of their marriage, they both worked and were blessed with a baby. Susan was passionate about her career, but ultimately she made less. Hence, she decided to stay home and care for the baby because childcare is insanely expensive. A few years of childcare before grade school turned into being a stay-at-home mom for the better part of nine years. 

During their Massachusetts divorce, Susan learns she’s only eligible for around six years of alimony. It’s doubtful that she will recoup the lost wages from being a stay-at-home mother during the next six years. Alternatively, Brad never lost wages. In fact, he received annual raises, rose to the top of his career field, and his earning potential will likely only continue to rise. 

Thankfully for Susan, the couple had a prenuptial agreement in which their terms dictated that should one of them stay home to care for a child during any part of their marriage, they would be compensated for that time in the event of a divorce. Alternatively, they could have included a clause that instead of compensation, the stay-at-home parent receives more assets than the higher earner. 

Either way, a prenuptial agreement can put in place terms that make the separation feel more equitable, especially if one partner left the workforce for familial duties.

Ready to learn more? Check out our Ultimate Prenup Guide and when you’re ready, choose HelloPrenup to create an easy, fast, and affordable prenup all from the comfort of your own home!

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