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Ten Facts About Women and Retirement

Are you one of the 83% of Americans concerned about their ability to retire? The National Institute on Retirement Security reports that more women than men are afraid they will not have retirement security. And, when you look at the facts, that shouldn’t be a surprise. But you may be surprised by what you learn here:

  1. Women are almost twice as likely as men to live below the poverty line during retirement. This is especially true for single and minority women.1 The poverty rate for single black women older than age 65 is 38.5%, and for single Hispanic women is 41.1% – over twice the rate of White women, 16.7%.
     
  2. Women make less money during their working years. For the last decade, median earnings for women working full time, year-round have averaged about 78% of men’s earnings.2 Furthermore, women are far more likely to work part-time jobs, in order to care for children and other family members. This leaves women with less disposable income, which often leaves less for retirement savings.
     
  3. Women receive significantly lower retirement benefits than men. Nationally, the median annual income for women older than age 65 is approximately $15,000, compared to same-age men, who had a median income of more than $25,000. Most of the sources Americans rely on for income during retirement are based on a worker’s lifetime earnings, including Social Security benefits and a pension (such as that provided by the WRS). Simply put, lower wages equals lower retirement benefits.

    Closer to home: In a random sample of 14,000 WRS annuities, women in 2013 had a monthly annuity averaging $1,965 compared to men, whose annuity averaged $2,613 per month.
     
  4. Women’s traditional roles as caregivers can negatively affect their retirement security. Women are more likely than men to move in and out of the workforce – experiencing breaks in their work histories – often to care for family members.3 Caregiving responsibilities are challenging and time consuming. It is important to understand that caregiving can also have serious financial consequences. Women continue to be the primary caregivers and are therefore at even greater risk of experiencing financial setbacks.
     
    According to the Social Security Administration, only 59% of women received retired worker benefits, as opposed to 79% of men. In addition, Social Security is calculated on the basis of one’s best 35 years of employment; if a person has fewer than 35 years in the paid workforce, a zero is entered for each missed year. Each zero lowers benefits. Moving in and out of the workforce reduces earnings, making saving for retirement difficult.
     
  5. Women are living longer than men. In the United States today, there are approximately 149.1 million women and 144.5 million men.4 While men outnumber women in the 35 to 39 age group, women outnumber men in the 40 to 44 age group and at all succeeding age cohorts. By age 85, there are twice as many women as men.
     
  6. Women who are single, divorced, and widowed face a higher risk of poverty in retirement.5 A woman’s marital status is a significant factor in determining economic security in retirement. Nearly retired, unmarried women are three times more likely to be poor and have lower household income and net worth than similarly aged married couples. Even when compared to unmarried men in the same age group, unmarried women are financially worse off. Unmarried women from minority groups have even fewer economic resources: Nearly 30% of unmarried African American and Latino women are living in poverty and have between 10-25% the net worth of unmarried white women.
     
  7. Women save less. Due in part to shorter work careers and lower earnings, women as a group save less money for retirement than men. And saving for retirement among minorities – men and women – is also concerning: A 2007 Employee Benefits Research Institute survey found that 48% of African American and 41% of Hispanic workers have saved money for retirement, compared to 66% of American workers overall. 
     
    Closer to home: Among women contributing to the Wisconsin Deferred Compensation Program (WDC), a supplementary savings program administered by ETF, women’s average account balances trail that of men by more than $15,000. In fact at all ages, women save less via their WDC accounts than men. Combined with expected longer life spans and growing rates of divorce after long marriages, lower savings leave women vulnerable to experiencing poverty due to inadequate incomes during retirement.
     
  8. More women than men are engaged in financial wellness education.  Women are closing the financial literacy gap in several key areas, including managing debt, saving for emergencies, and feeling like they are on track for retirement. 6, 7
     
  9. Defined benefit plans, like the WRS, provide stable, supplemental retirement income.
    Research shows that women who depend on their spouses’ retirement plans are better protected under a defined benefit system, and women who have their own workplace retirement plans fare better under the defined benefit system due to economic efficiencies and plan characteristics.8
     
    Closer to home: When a WRS member retires and receives his or her pension, they will receive that core amount for the rest of their lives. Spouses or domestic partners who are listed as joint survivors will continue to receive pension benefits after the member’s death.
     
  10. Social Security and a pension are not enough.
    Social Security was designed to provide a minimum level of support (subsistence level). Like defined benefit pensions, Social Security also offers a secure income that cannot be outlived. Many fear changes are looming for Social Security and the retirement benefits the system will provide for younger generations. This makes the so-called “retirement stool” (employer pension, Social Security and individual savings) even more important for working age women.
     
    Closer to home: In addition to traditional savings accounts like individual retirement accounts (IRAs), there are a number of voluntary retirement savings programs which allow eligible employees to supplement anticipated retirement benefits by saving and investing through voluntary paycheck contributions. Public employees in Wisconsin can use the Wisconsin Deferred Compensation Program (WDC). With the WDC, employees design a retirement savings plan that is right for them.

Footnotes
1 Minority Women and Retirement Income, Women’s Institute for a Secure Retirement, 2008
2 The Wage Gap by State for Women Overall 2013, The National Women’s Law Center
3 Financial Steps for Caregivers: What You Need to Know About Protecting Your Money and Retirement, Women’s Institute for a Secure Retirement, 2014
4 Facts, National Education and Resource Center on Women and Retirement Planning
5 Minority Women and Retirement Income, Women’s Institute for a Secure Retirement, 2008
6 Women in the Labor Force: A Databook, U.S. Bureau of Labor Statistics, 2013
7 Gender Gap in Financial Literacy , Financial Finesse Reports, 2014
8 Shattering the Retirement Glass Ceiling, National Institute on Retirement Security, 2009