Forty basis points. That is how much more Fidelity Investments found women investors earned than men in a 2021 study, and it is the figure that matters for any mother who has stepped away from a paycheck and assumed the money talk belongs to her partner.
The bottom line: a career pause cuts income, not standing. Ashley Feinstein Gerstley, founder of The Fiscal Femme and author of The 30-Day Money Cleanse and Financial Adulting, put it bluntly in a 2022 interview with The Power Pause. “There can be this stigma that if we’re not currently earning money, we have less of a financial say. But that couldn’t be further from the truth.”
Start with the budget
When one partner stops earning or takes a pay cut, the easy assumption is that the same person absorbs the cost, cutting personal spending and saving less. Feinstein Gerstley says that is the wrong frame. It is a family decision, and the adjustments should be made together and early. She suggests sitting down with a partner to map out what the break looks like for everyone: how spending, saving and investing will change.
Her underlying point is about power. The higher earner should not carry more say in the relationship. The childcare and housework that free one partner to work outside the home count as a contribution, and both people should acknowledge it.
Retirement savings after a pause
Savings usually dip. A pause or downshift can mean losing access to a company 401(k), or earning too little to keep up the same contributions. Feinstein Gerstley says that is worth assessing up front, so goals and timelines can be moved before they become a surprise. Falling short now does not rule out saving more later, and small adjustments over time add up.
Three options remain for someone without a workplace plan:
- A spousal IRA, which lets the earning spouse contribute to the retirement savings of a partner with no income.
- A health savings account, for those on a high-deductible health plan. Money can pay qualified medical costs pre-tax, or be invested for tax-deferred growth.
- For anyone with a business or side hustle, a SEP-IRA, solo 401(k) or SIMPLE IRA.
Divorce is the other reason to care. Retirement accounts such as 401(k)s and IRAs are typically owned by one person, which she cites as a good case for opening a spousal IRA if you are not bringing in income.
Stay in the room
Her last piece of advice applies to anyone in a relationship, she says, but matters most for women who have paused work: know where the family stands and what it is aiming for. Earning less right now does not mean having less of a say. And it pays off. Women who invest tend to do it well, and taking part also models financial equity for the next generation.
Financial freedom, in her definition, is confidence and security about money. She counts an emergency fund covering three months of expenses and paying down credit card debt among its building blocks.
