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March: Women's History Month -- and the Winter of Our Retirement Discontent

March: Women's History Month -- and the Winter of Our Retirement Discontent

I typically associate the month of March with the taming of the winter just about now, when spring flowers begin to sprout, and we look forward to new beginnings. However, the month is also “Women’s History Month” – a time to celebrate women’s accomplishments in this country so that can appreciate and understand where women have made progress – and where we continue to lag, even in 2014.

Retirement is one area where women are still experiencing winter – not spring. And for millions of women their retirement years are not a pretty picture at all.

This nation has a Retirement Income Deficit of $6.6 trillion. That’s the gap between what people have currently saved and what they needed to have saved by now to maintain a basic standard of living in retirement. According to the Center for Retirement Research, more than half of U.S. households aren’t prepared for retirement.

Of course, both men and women face this crisis. However, it disproportionately affects women. As noted in a new video released by the Service Employees International Union for Women’s History Month, “Despite decades of social and economic gains, older American women are still twice as likely as elderly men to be living near or below the federal poverty line. They are also less likely to have access to reliable retirement income.”

Why is this? More women than ever are working. Shouldn’t that mean that more women are better prepared for retirement?

“The fact is, despite more time in the workforce than previous generations, older women today are still more economically vulnerable than men,” says Amy Matsui, Senior Counsel at the National Women’s Law Center. “Throughout their lives, women typically still earn lower wages than men. They are more likely to work part-time and take time off to care for children and elderly or disabled relatives, which can further lower their earnings. In addition, women make up the majority of low-wage workers, and low-wage jobs (such as those in retail, hospitality, or food service) are less likely to offer an employer-sponsored retirement plan. It’s no surprise that, even after a lifetime of work, women have fewer retirement savings than men, but have to make that money last longer. We need better solutions.”

At the end of February, the Government Accountability Office released a report on marital status and retirement income. Among its conclusions: the shift from good old-fashioned pension (defined benefit) plans to 401(k)s increases retirement risks for women, because, unlike traditional pensions, 401(k) plans don’t automatically provide retirement benefits for spouses.

What are the answers?  The most important one is to increase Social Security, not cut it. Consider these facts:

  • Fifty-six percent of Social Security recipients age 62 and older are women.
  • Women make up 68 percent of recipients age 85 and older.
  • Social Security provides at least 90 percent of income for almost half of women 65 and older.
  • The average Social Security benefit for women is just over $13,000 per year.

With more than 10 percent of women over the age of 65 living in poverty in 2012, cuts to Social Security would make this rate even worse.

We need to keep pension plans that currently exist – in both the private and the public sector. These pensions provide guaranteed income for life and benefits to spouses, which help keep women and families out of poverty. There should be spousal protections in 401(k)s, and options to turn account balances into lifetime income that cannot be outlived.

Lastly, we need new solutions that will provide low-cost, efficient ways for everyone, including women, to save for retirement. Fortunately, proposals such as Senator Tom Harkin’s USA Retirement Funds and state-based plans for private-sector workers have been introduced that could help people who don’t already have a plan.

There’s an old saying, “A woman’s work is never done.” We think that women should have a right to see that their work is done – and they should have sufficient income to enjoy the fruits of their labors and to retire in dignity.

This blog entry was cross-posted on Huffington Post.

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