(US News) -- AFTER DECADES TOILING under the gender pay gap, women are left with $1 million less than men come retirement. But there's an easy way to shrink this wealth gap: Women should be investing more.
While women may struggle to match men in pay, they outperform men in long-term investing. Fidelity Investments found that women on average earn 0.4% higher returns than men. This may sound like a small difference, but when carried out over 40 years, it can translate into significant money.
An investor who earned 7.4 percent and invested $18,000 per year for 40 years would have more than $500,000 more than someone who invested the same amount but only earned 7 percent. The difference only grows the more you save.
Alas, rather than combating these lower earnings with aggressive investing, women keep more than 70 percent of their wealth in cash.
"When you earn less, every dollar saved is precious," says Carrie Schwab-Pomerantz, board chair and president of the Charles Schwab Foundation and senior vice president at Charles Schwab. "Many women opt to protect those dollars by investing conservatively."
This creates a self-fulfilling prophecy of lower wealth: Women earn less income and their income in turn earns lower returns from their conservative investing style.
Women can close the wealth gap by investing. The less income you earn, the harder your dollars need to work for you. Without the growth opportunities provided by the stock market, you're less likely to reach your financial goals.
An immediate solution to close the wealth gap is to invest more and earlier. The earlier you start investing, the more time your investments have to grow, and the more time you have to weather any market ups and downs along the way.
The irony is women are better equipped than men to be successful long-term investors, but the nature of the industry has kept them away.
Focus on your goals and ignore the boys. While men are often focused on performance and beating the market, women tend to be more concerned with meeting their financial goals.
Goals-based investing is a smart long-term strategy and part of the reason when women do invest, they tend to outperform men. But having a different approach to investing than the patriarchy poses another challenge: Men and women often speak a different language when they talk about investing, and, unfortunately for the ladies, Wall Street uses manspeak.
The financial services industry was built by men for men. The New York Stock Exchange Board dates back to the early 1800s. Wall Street's origins reach even further back to the end of the 18th century, decades before women were even allowed to own property, let alone invest. It's no surprise, then, that the financial services industry caters to men.
Financial planning models default to men's salaries and life paths. Financial professionals and the financial media talk about "beating the market" (competition) and "building a portfolio" (a construction metaphor) when they could just as easily discuss meeting financial goals and "creating" or "knitting" a portfolio. This can be off-putting to women who already face social stigmas against investing.
"As a society, we've managed to shift the blame for not investing as much onto women themselves, to the point where women feel they need more financial education than men," says Sallie Krawcheck, co-founder and chief executive officer of Ellevest, a digital financial advisor designed for women.
Jordan Sowhangar, a wealth advisor at Univest Wealth Management, recently had a female client come to her after getting sick of feeling less than the "men in suits" at her old financial services firm.
But it's not just "men in suits" who propagate the stereotype against women investing. Women can also be culpable.
In joint meetings with husbands and wives, Sowhangar "can't say how many times" she directs a question to the wife only to have her say, "I'll let my husband answer that; he knows how to do this investing stuff." Other times the wife won't even show up to the meetings.
Engage in your financial journey. Women need to engage in their financial lives. If women's longer life expectancies are any gauge, a couple's joint wealth will likely become the wife's alone one day.
"Women need to be prepared (financially) at the end of life and all of the steps along the way," Margeson says.
When you don't understand something, speak up. "I love it when (clients) stop me mid-explanation to say they don't understand," Sowhangar says. "There's no excuse not to do that."
When you do press pause-rewind during your financial planning meetings, you may find you're not the only one who was a bit confused.
Men are also burdened by their own social stigmas, such as not appearing weak or incompetent in front of their wives.
As hard as it can be for a woman to speak up when she doesn't understand, men may find this even more challenging.
Thus the situation becomes even more unfortunate when neither party understands what's going on, but one is pretending and the other is afraid to speak up, Sowhangar says.
Make talking about investing part of your daily routine. Part of the reason women are reluctant to speak up in investing conversations is the pervasive social taboo against talking about money. More than 60 percent of women say they'd rather talk about their own death than money, according to Merrill Lynch research. Even more report financial planning is too complicated to think about.
This reluctance to address the topic of money and investing only compounds the problem: When women show a lack of interest in finance, women's media assumes they don't want to hear about it, so the topic is never raised.
Age Wave reviewed the March 2018 issues of the 17 top women's magazines for financial coverage. They found that out of 1,594 pages of editorial content, only five pages covered personal finance.
We can't expect to learn about a topic if it's never addressed. So start a dialogue about investing with your partner, your advisor, your friends, your children, anyone who will engage in conversation. Dedicate 10 minutes of each book club meeting to talking about money or investing. Even better: Make next month's pick a finance book, Margeson suggests.
Outside those conversations, incorporate learning about investing into your regular routine. Every Saturday as you do your laundry, read one article about investing. Aim to learn one new thing each week, Margeson says.
Embrace investing. As Marie Curie said, "Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less."
Investing shouldn't be feared and avoided. It should be understood and embraced. Then, women can overcome the wealth gap.