Women are More Likely Than Men to Face Poverty in Retirement
By: Rachel Kaprielian
July 16, 1998
Rachel Kaprielian represents Watertown and part of Newton in the
Massachusetts House. She is also a fellow at the Radcliffe Public Policy
With the national debate on the future of feminism beginning to escalate,
discussion of gender equity should not be limited to the American workplace.
Just as today's working women continue to fight for fairness in wages and
opportunities, many older women are struggling with inequity in retirement.
Women make up nearly three-quarters of the elderly poor, and one-quarter
of all women over the age of 65 live in poverty. Half of all women
collecting Social Security rely on it for at least 90 percent of their
income, compared with 29 percent for men. Unless inadequacies in the current
system are corrected, far too many women will spend their "golden
years" in poverty.
Why are women likely to be poorer in retirement than men? Although the
laws governing retirement are gender-neutral on paper, today's retirement
policies and plans fail to reflect the work patterns and demographics of
American women. Women typically live longer than men and thus have a longer
retirement to fund. If a woman is divorced or widowed - as half of all women
over 65 are - she will usually receive a smaller Social Security check and a
smaller pension benefit.
Widows collect approximately half of what their husbands would have
collected. The picture is especially bleak for divorced women because most
states provide a woman no automatic legal right to half of the pension her
husband earned during the marriage. Too often a woman going through a
divorce fails to fight for her share of her husband's pension, which is
typically a couple's second-largest asset after their home.
Because women still earn only 74 cents to every dollar earned by men,
they typically accrue less in Social Security and other pension benefits
based on earnings. In addition, women accrue lower retirement benefits
because they change jobs more frequently than their male counterparts -
around once every four years. The typical private-sector "vesting"
period before qualifying to receive benefits through an employer-sponsored
pension plan is five years. And women, who continue to be the primary
caregivers for children and elderly relatives, take more years out of the
paid work force than men.
These career interruptions and changes often translate into a lack of
opportunity to participate in employer-sponsored retirement plans. Women are
also disproportionately represented in the growth of part-time jobs. In
1993, twice as many women as men - 10.7 million - worked part time. Overall,
a scant 15 percent of part-time employees pay into any pension system at
The shift to employee-funded defined contribution plans, such as 401(k)
plans, is another factor. Workers in previous generations were far more
likely to work for only one or two employers in the course of their working
lives. In return for this loyalty, many employers provided lavish pensions,
often 50 percent of their working salary. Millions of older Americans lived
out their retirement with comfort and security.
Then, with the passage of new tax legislation in the 1970s and early
1980s, more and more employers began shifting away from expensive
defined-benefit pension plans to tax-advantaged, somewhat more portable,
retirement savings plans. These plans, such as the increasingly popular
401(k) plan, are largely funded by employees themselves. In fact, employers
are not required to contribute anything at all, and many will contribute to
match only a portion of the employee's contribution.
Consequently, lower-wage workers, who have less cash available after
meeting basic expenses, are least able to afford to fund such a plan. And
these lower-wage workers are disproportionately female: women comprise
three-fifths of all service employees, 96 percent of all child-care workers,
and 97 percent of receptionists.
Public policies are needed that will buttress personal responsibility by
offering programs to shorten time-to-vesting requirements, offer more
retirement plan options and venues in which to participate, provide regular,
comprehensive education and information about pension and investment plans,
ensure the fiscal integrity and stability of the Social Security system,
and, perhaps most compelling, work toward a more "user friendly"
pension system so that you can "take it with you."
We cannot base today's policies on yesterday's work-family model. In an
economy that increasingly relies on human capital, intelligent retirement
strategies are as good for America as they are for American women.