Boomer women
take a
bow. You’ve worked and earned more than the generation before you and
will reap those rewards in retirement. Rosie the Riveter would be proud.
That’s the good news from a new study by the Urban Institute that was
discussed yesterday at a forum held in Washington, DC titillating
titled: “Can Boomer Women Afford to Retire?”
Projections show that the majority of boomer women will earn their own
Social Security and will receive higher benefits than previous
generations. In addition, more will have their own pensions or
retirement accounts, which will generally be worth more than earlier
generations’ accounts.
Two thirds of boomer women now between the ages of 47 and 56 will
qualify for Social Security retirement benefits based on their
earnings, up from 44 percent of pre-boomers born between 1936 and 1945,
and only 1 in 10 of them will likely rely solely on spouse or survivor
benefits.
Those are some findings of “Boomers’ Retirement Income Prospects,” by
Melissa Favreault, Richard Johnson, Karen Smith, and Sheila Zedlewski.
The report compares earnings, retirement, and financial assets of
boomers born between 1946 and 1955, and those late-boomers born between
1956 and 1965, and a pre-boomer group, born between 1936 and 1945.
The researchers found that women are delaying retirement, as are men.
Between 1990 and 2010, labor force participation rates at ages 62 and
older increased from 22 to 29 percent for men and from 12 to 20 percent
for women. This growth stems, in part, from Social Security changes
that raised the full retirement age, as well as the shift away from
traditional private-sector pension plans that reward early retirement.
By age 70, women now 47 to 56 will have worked a median 40 years of
employment, compared with 30 years for pre-boomer women, according to
the report.
Wages are better, but..Employed
boomer
women born between 1946 and 1955 earn 36 percent more per year
in inflation-adjusted dollars than their pre-boomer counterparts
($30,000 versus $22,100), while women ages 50 to 54 will earn 59
percent more ($35,100).
While it’s great that women’s income has gone up over the years, if you
ask me, those annual earnings are depressing. Reality bites. Men ages
50 to 54 earn a median annual income of $48,900 per year. And men ages
55 to 56 clock in at $50,400.
The wage gap makes me crazy. I have battled it myself since my 20s, and
there’s much more to these numbers than this survey unveils, so bear
with me while I climb up on my soapbox.
According to the most recent figures from the Bureau for Labor
Statistics, white women earned 81.4 percent as much as their male
counterparts, compared with black (91.1 percent), Asian (80.3 percent),
and Hispanic women (90.4 percent).
The fact that women earn less has serious repercussions. Reduced
salaries mean smaller Social Security payouts and slimmer pension
benefits, too. To calculate your Social Security payout, click here.
For more analysis, go to The Big Decision: When To Take Social
Security) and How Not to Outlive Your Money.
Then too, the report does not get into the fact that many women take
time off full-time work to raise a family or care for an aging
relative.The result: fewer years they can pay into a retirement plan.
Women are also more likely to work for smaller firms or part-time in
jobs that have no tax-deferred retirement plan at all.
Women live roughly five years longer than men, so they need more funds
set aside to protect against outliving their income. Alas, U.S. women
are behind in saving for retirement, according to the 2011 retirement
survey from Wells Fargo. The survey queried middle-class women across
five decades, from those in their mid-20s to those who are already
retired and in their 60s.
Women hold more than half of high-paying management and professional
positions in the U.S., and three women are in college now for every two
men. But when it comes to retirement, they lag in their confidence
about how to prepare for this phase in life, and they are less likely
to see themselves in the driver’s seat, says Karen Wimbish, head of
Retail Retirement for Wells Fargo. Just 54 percent of women said
they are “confident” they will have enough saved to “live the life they
want” in retirement, compared to 62 percent of men.
Can boomer women afford to
retire? Your guess is as good as mine. The Urban Institute
study’s bottom line: Boomers have “increasingly uncertain retirement
prospects”. How boomers really fare in retirement will hinge on several
unknowns, the report authors conclude: How much will stocks and bonds
earn over the coming decades? Will more boomers than we expect end up
working well into old age? Will a significant share end up dipping into
their housing wealth? Will Congress cut boomers’ Social Security?
And importantly, how much will boomers need to spend on health and
long-term care? One estimate suggests that out-of-pocket medical costs
will consume 15 percent of income for the median boomer retiree, up
from 10 percent for the pre-boomer retirees–which suggests that boomers
will need more than their predecessors to enjoy a comfortable
retirement, the researchers point out.
No kids to pick-up the
pieces. This healthcare issue hits home for me touching on
something that causes anxiety when I let myself think about it. “Adult
children often support their retired parents today, sometimes with
financial assistance, but more often with chores and personal care when
their parents become frail,” the researchers note. “However, declining
fertility rates will leave about one in six late-boomer women
childless. More boomers will need to pay for help if they become frail.”
I personally stress about this since I fall into this category. Who is
going to chip in for my health care needs if I don’t have enough socked
away to cover it? What if I end up needing the kind of care my dad did
when he battled Alzheimer’s. See my family’s story here. I can’t really
expect my nieces and nephews to pay for my care, they have their own
parents to worry about.
So while I’m really happy to find evidence that women are better
off than they were in the workforce, I’m still worried about boomer
women, myself included. How we deal with aging and
retirement–particularly if you’re a woman who doesn’t have a spouse or
a partner to share the load–is going to take discipline and focus.
If you’re not paying attention to your retirement savings already, do
me a favor, try one thing today to start educating yourself about
investments like Roth IRAs and mutual funds, long-term care insurance
and annuties.
There’s lots of help available on the Internet. One site I particularly
like for women is WISER. Set aside the time to learn about investing
and retirement planning. It will pay-off. To quickly estimate how much
you need to save, use Choose to Save’s Ballpark E$timate calculator.
Don’t let the numbers trouble you —think of it as an incentive to
get to work.
As the 1942 song goes: “ All the day long, Whether rain or shine. She’s
part of the assembly line. She’s making history. Working for victory–
Rosie the Riveter.”
