Why Women are Poor in Retirement

Oct 15, 2008 WHY WOMEN ARE POOR IN RETIREMENT By Cindy Hounsell President of the Women’s Institute for a Secure Retirement As the candidates get ready for their debate tonight, there are a few things I would like to tell them. First, Social Security is intended to replace approximately 40 percent of an average earner’s wages, but many women rely on it as their primary or only source of retirement income. This is one of the major reasons why so many women are poor or near poor. Second, in theory, women should be saving more money than men because they live longer and will need money to support themselves for about three to four more years than men on average and pay for higher expenses for health care and prescription drugs. Yet, in reality they are not able to save the vast amounts that are needed. As a result, millions of women are vulnerable to outliving their assets and facing the real possibility of poverty. My hope is that public policymakers will adopt changes to prevent poverty in old age such as providing caregiver credits, improving and expanding the saver’s tax credit, developing a better system of financing and providing long-term care and considering the needs of older women who spend much of their income on health related expenses. In the meantime, women need to make the most of the existing system and make the best financial decisions toward securing their futures. Some basic and troublesome facts about women and retirement security—information the candidates need to hear: Earnings • Two-thirds of working women earn less than $30,000 a year. • Nearly half of all women work in low-paying jobs without retirement plans or 401 (k)s. • Women earn on average 78 cents for every dollar earned by men. • Working women pay a steep price for unequal pay. The typical 25 year old woman with a college degree in 1984, who is now in her mid 40s, has lost a total of $440,743 in wages over her lifetime. • Median earnings of full-time women workers in 2007 were $31,928 compared to $39,832 for men. The gap for minority women is even larger: median earnings for African American women in 2007 were $26,988; for Latino women, earnings were $22,880. Work Status • Women are more likely than men to work part-time. Part-time employment is associated with lower wages and fewer opportunities for retirement benefits. • Over a lifetime, women will spend 27 years in the workforce, compared to almost 40 years for men. Life Expectancy • Today, an average woman’s life expectancy at birth is 80.4 years, compared to 75.2 years for men. If a woman lives to age 65, she can expect to live until the age of 85 ― about three years longer than a 65-year-old man. Marital Status • Between the ages 75–84, only 34 percent of women are married with their spouse present. For women aged 85 and older, only 13 percent are married with their spouse present. In contrast, 70 percent of men aged 75–84 and 56 percent aged 85 and older are married with a spouse present. • With the death of a spouse, women often experience a steep drop in income. When a widow loses a spouse she also stands to lose a significant amount of income from her spouse’s pension and even from Social Security. • Many widows face poverty for the first time in their lives. Retirement Income • The median income for retired women is $13,764 compared to men’s income of $23,322 or 59 percent of what retired men are receiving. • The poverty rate for women age 65 and over is 12 percent. Single women in this age group are at much higher risk of poverty. Over 20 percent of single white women are living in poverty; the rate is double for single African American and Hispanic women. In light of these facts, any national discussion about cutbacks in the Social Security and Medicare programs should not just be focused on reducing the deficit but balanced with the actual delivery of income and benefits and the implications on the lives of older women. Women traditionally spend their money on taking care of their families throughout their working lives. Let’s hope our candidates and policymakers remember this as they create our future policies.

This post is part of Blog Action Day 08 - Poverty.

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Please keep these excellent posts coming.
[...] Read all about it in “What About Jane Plumber?” over at CNN.com . While you’re at it, check out this post by Cindy Hounsell (Pres of the Women’s Institute for a Secure Retirement), “Why Women Are Poor in Retirement,” too. [...]
[...] Why Women are Poor in Retirement [...]
[...] Why women are poor in retirement. [...]
People seem to love to get married..it is the staying part that does not work so well. Women want a divorce and sometimes for weak reasons..so they have to pay the price...So the lesson here is be sure you can take care of yourself before leaving the comfy nest.
It is a sad state of affairs. And if the candidates do anything, they should focus on two disturbing issues - marriage and divorce. There is no doubt in anyone's mind that divorce is the single biggest retirement problem for women. More forward thinking laws about how assets are distributed by those who decide such cases, regardless of the representation either party has would help a great deal. Often the party with the best paid attorney trumps. Judges who decide these cases should champion the rights of the weaker - better yet, the historically underrepresented party. And I am not talking even splits here but instead percentage division based on who has earned the most, who will be taking care of the children and who will be living where. Of course, better marriage contracts, reconstructed at the onset would do wonders to offset the possibility of this occurring years later. For "better or worse" should probably read: "The lesser wage earner should get half of all assets inclusive of retirement accounts and 10% in addition for each child born to the relationship." This acts as state mandated pre-nup and doesn't take into consideration how much debt is accumulated or whether bad financial decisions will be made over the course of marriage, but it should shore up some of the retirement issues you brought up.
"Over a lifetime, women will spend 27 years in the workforce, compared to almost 40 years for men." One of the reasons women spend less time in the workforce is because they take time out for caretaking -- their small children, or perhaps when parents become older and ill. Men -- as a rule -- don't take this time out for caretaking. Therefore, there should be caretaker credits in the system that women should be able to rely on as a form of pension.
[...] rss@dailymotion.com (alleysplanb) wrote an interesting post today onHere’s a quick excerptFirst, Social Security is intended to replace approximately 40 percent of an average earner’s wages, but many women rely on it as their primary or only source of retirement income. This is one of the major reasons why so many women are … [...]