For instance, while women make up 39 percent of the global workforce, they accounted for 54 percent of overall job losses during the pandemic. At the same time, reports from a long list of think tanks, including Brookings and the Center for American Progress, found that women shouldered the majority of child care and household responsibilities during the crisis amid disruptions to what was an already inadequate childcare system. In a world long challenged by gender inequality, the COVID-19 pandemic laid bare existing disparities—and ratcheted them up several notches, said the Brookings report. As challenging as 2020 was for women everywhere, many had not yet reached their breaking point. That took until 2021. A report from Lean In and McKinsey & Company titled Women in the Workplace reveals that women in corporate America are even more burned out now than they were in 2020. And burnout is escalating much faster among women than men. Most notably, “one in three women says that they have considered downshifting their career or leaving the workforce [in 2021], compared with one in four who said this a few months into the pandemic,” according to the McKinsey data. Also notably, 42 percent of women say that in 2021 they have often been, or almost always are, burned out, compared to 32 percent a year ago. By comparison, 35 percent of men expressed such sentiments in 2021, compared to 28 percent in 2020. Last, but hardly least, four in 10 women have considered leaving their current company or switching jobs—and high employee turnover data from the past few months suggests that many of them are indeed following through, says the McKinsey report. These statistics have a variety of significant ramifications for women, including financial. Here’s a closer look at the price women pay when burnout drives them to the point of leaving their careers behind or putting their work-life on pause. Plus, tips for how to prevent (or cope with) this type of professional fatigue and stress. “It can bring with it a host of financial challenges, including several hidden costs that women may not be aware of,” says Kapusta. “These include an impact on potential raises and promotions, [as well as an impact to retirement] contributions and potential growth of retirement savings.” With regard to retirement savings and growth, in particular, when a woman steps away from work (or downshifts to something less than full-time), she’s not only sacrificing a stream of income, or a portion of that income, but she’s also eliminating the retirement contributions that may have been made from that salary each pay period. And if the employer provided matching contributions to the retirement account, those too are lost. There’s also the loss of potential investment growth for the contributions not being made. RELATED: Can I Afford to Retire Now? Data also shows that women who step out of the workforce often return to a dramatically reduced salary—anywhere from 15 to 45 percent less, says Kapusta. “When you come back at that lower salary, then you’ve got a lower base for everything—from bonuses to retirement contributions,” continues Kapusta. “You’re facing a different salary trajectory over the course of your career.” There are still more financial implications tied to the burnout women are facing as well. Leaving the workforce or opting for part-time work may also trigger loss of health savings accounts (HSAs), and may mean they are now shouldering out-of-pocket costs for health care coverage. None of which touches upon the elephant in the room—the impact to Social Security credits. Social Security benefits are based on the top 35 years of one’s earnings. “If you step away after you’re somewhat established, it could impact that 35-year measure, because again when you step away, your salary over time may not be as high as it might have been,” says Kapusta. A Bank of America report titled Women & Financial Wellness found that prior to the pandemic, the average woman spent 44 percent of her adult life out of the workforce compared to 28 percent of men. This time away from work translates into a wealth gap of more than $1 million by retirement, according to Bank of America data modeling. The wealth gap is the difference between men’s and women’s sum of all financial resources—such as earnings, investments, retirement savings, and additional assets such as property. These things often derive from career choices and trajectories. “When we think about and model the financial life journey of a male versus a female, we observe that women’s financial lives are very different,” says Surya Kolluri, a member of Bank of America’s thought leadership team, and managing director for retirement and personal wealth solutions. RELATED: Why Women Need to Be Financially Planning for a 100-Year Life There’s also a notable gap in the Social Security benefits amassed over the course of a lifetime by women. Data from 2019 for the entire U.S. population showed that the average annual Social Security income for a man is about $17,374 annually, while for women it amounts to about $13,505. “That’s about a 30 percent difference, and it’s the result of all those life journey differences for women, such as pay differentials, taking time off, and investing differently,” says Kolluri. Still, you can at least prepare thoughtfully for time away from paid employment, creating a plan that prevents you from falling too far behind financially. Something many women are not doing. Fidelity Investments surveyed women caregivers in early 2021 and found that just one-third took the time to calculate at least one of the costs associated with stepping away from work, and very few calculated all of them. “It’s critical for women to take the time to estimate the full financial impact of the change they’re considering,” advises Kapusta. RELATED: Women’s Biggest Financial Regrets—and What to Do About Them Right Now To help make that task easier, Fidelity introduced a calculator designed to gauge the cost of leaving the workforce and the overall impact it will have on one’s financial picture. There are also some steps women can take to help mitigate the various impacts, says Kapusta, including:
Many employers have new and improved caregiving benefits, particularly in light of COVID-19, that are meant to help you deal with family issues and illness without permanently leaving your job. “They may offer enhanced childcare reimbursement, such as a flexible spending account, flexible schedules, workshares, and family medical leave (FMLA) benefits,” says Kapusta. “Before you decide to leave your job, talk to your benefits department; it’s in their best interest to help you succeed.” If you do leave the workforce, there are steps you can take to keep your retirement savings on track. If you’re married and not employed, contribute to a spousal IRA. “Talk to your partner about how much you as a couple can put into this retirement saving account,” says Kapusta. “If you’re single and working part-time or as an independent contractor…you can contribute to an IRA. This way, you aren’t losing out on all of that potential growth over so many years.” Before you make any big change, sit down with a financial professional to talk through ways to still acheive the best financial future possible. “Set up a consultation and develop a plan,” says Kolluri, adding that “you should make the decision with eyes wide open in terms of financial implications for both the near term and long term.”
“It really pays to lead with future generations in mind,” explains Hennessey. “I try to set an example for girls and women who will become leaders someday. As a mom of two girls, I remind myself to show them what work-life harmony really looks like, how to take care of themselves, and hold boundaries, and how they can lean into their dreams and talents—even when it feels intimidating or uncomfortable. I want them to know that they can do hard things and show up as their full selves.”
