Save and Invest

Here's how much you'd have if you'd invested the money you lost to the pay gap

Ellie Kemper as Kimmy Schmidt.
Eric Liebowitz | NBC

April 2 marks Equal Pay Day, the day that women would have to continue working to in order to earn the same amount men earned in the previous year, on average.

Earning less can have a lasting impact. Women aren't just losing out on wages, but have less freedom to save and invest for the future. And thanks to compounding interest rates, even a slight difference in the amount they have to invest now can add up to a major discrepancy down the line.

"It's clear — and unfortunate — that the pay gap can quickly become a wealth gap," Arielle O'Shea, investing and retirement specialist at Nerdwallet, told CNBC Make It in 2018. "It's simply much harder to find the money to invest on a lower salary, and consequently women stand to lose out on investment returns over time."

In the U.S., men earned a median amount of $973 per week in 2018, while women only pulled in a median of $789 per week. Over the course of a year, that adds up to a difference of $9,568.

To build an equivalent retirement nest egg, on average, women must save $1.25 for every $1 a man saves.
Arielle O'Shea
investing and retirement specialist at Nerdwallet

If women were able to invest those earnings, after 10 years they would have accrued $38,000 from interest alone, with a 6 percent rate of return. In total, it would amount to around a $134,000 boost to a retirement account.

Over 40 years, that number would expand even further. Investing $9,568 per year with a 6 percent rate of return would yield $1.5 million before taxes and inflation.

While these numbers are hypothetical — it's impossible to predict the future of the market or a woman's earning potential — it provides a startling look at how the wage gap can cost women far more than it appears at face value.

"The hard reality is that women need to save a greater percentage of their income to accumulate enough money for retirement," O'Shea says. "To build an equivalent retirement nest egg, on average, women must save $1.25 for every $1 a man saves."

This is an updated version of a previously published article.

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