Women Have Less Security In Retirement Due to Lower Earnings and Higher Risks During Their Careers.
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Women face a vastly more insecure retirement than men, a new report co-authored by Joelle Saad-Lessler, Tyler Bond and myself shows. They have fewer opportunities to save for retirement during their careers. They earn lower wages in part because of discrimination, structural barriers and more economic risks, especially from divorce and caregiving, during their working lives. They then enter retirement with fewer savings, while still facing added economic risks such as longer life expectancies.
Using data from the Bureau of Labor Statistics’ Survey of Income and Program Participation we find that women have less retirement income than men. For instance, women 65 years old and older had about 80% of the income of men in that age group — $47,244 compared to $57,144 – in 2016. Moreover, women rely more heavily on Social Security – making up 52% of their income compared to men’s 48%.
It is well-established and again confirmed by our data summary that women have fewer retirement savings, not because of lower participation rates, but because of lower earnings during their working lives. They often leave labor force or reduce hours during marriage, reducing career earnings when they reenter after divorce. Women are also more likely to end up with caregiving responsibilities for children and aging parents, reducing their career earnings. And women often face outright discrimination in their jobs, so that they get paid less than men for doing the same work. At the same time, they often face institutional obstacles steer women towards lower-compensated careers in retail and care work. Lower earnings and thus lower retirement savings are neither an accident nor women’s choice, but the result of systematic obstacles for women to build real retirement security.
As a result of lower lifetime earnings and fewer private savings, women 65 years old and older are more likely to end up in poverty. Poverty is more widespread among never married and separated women than among married ones. Moreover, women of color are more likely to live in poverty in old age than white women. This is especially true for Latina women of whom 17% were poor in 2016. But even older Black women with a poverty rate of 9% and Asian women with a poverty rate of 10% were twice as likely as white women to be poor in 2016. Finally, poverty among women increases more with age than is the case for older men and women. Importantly, women are more likely to live to older ages than is the case for men, so that a lot more older women are poor than is the case for older men.
Divorce and separation pose a substantial financial risk for women. Women are more likely during a marriage to reduce hours or leave labor force all together to take care of children. They thus have need to restart their careers after divorce, which is not the case for men. Divorced or separated women are also more likely to still juggle dual challenges of child care while working for pay. These factors are reflected in differences of retirement savings as divorced women between the ages of 18 and 64 years had retirement savings accounts of $38,316 and separated women had balances of $10,478, compared to $50,126 for married women in 2016.
Caregiving is another key risk that makes it more difficult for women to save for retirement as data from the University of Michigan’s Health and Retirement Study shows. Women are more likely to be caregivers than is the case for men. Even in married couples with caregiving responsibilities, women will bear a disproportionate burden of those responsibilities. Caregiving risks reduce labor force participation, hours at work, pay as well as caregivers’ own health, all of which make it harder to save for retirement by lowering access to retirement plans, reducing earnings and increasing expenditures. Not surprisingly, all forms of caregiving are associated with lower retirement balances. Spousal caregiving risk has the largest, most persistent detrimental effect, followed by parental caregiving. Child caregiving risk is high when children are younger, but people recover when children are older. The effects of caregiving, especially parental caregiving, linger after caregiving ends.
There is no silver bullet for creating retirement equality for women. Addressing the retirement savings challenges for women will instead require a multitude of approaches. These will include better pay in stable jobs with better benefits. It will also need to include public support for child care and adult care. Finally, policymakers could expand Social Security benefits that address known challenges for women such as divorce and caregiving.