When it comes to retirement, women are in even more trouble than men, says a new study.
Numerous studies indicate that a retirement crisis is pending, with most Americans having saved barely enough to get through a single year — much less all the years of an entire post-employment retirement and all the health care costs they’re likely to bring.
But women are particularly challenged in putting away enough money to see them through the years when they leave the workplace — and a new study from the National Institute on Retirement Security (NIRS), “Shortchanged in Retirement: Continuing Challenges to Women’s Financial Future,” examines what it calls the “three-legged stool … of Social Security, a pension, and personal savings for retirement,” which it says is “broken, especially for women.”
Baby boomer women, the study says, are the first generation to hit retirement age in a time when they’re less likely to have a defined benefit pension, don’t get enough Social Security to make ends meet, and have not managed to save enough to make up the difference.
They “find themselves in the workforce well into retirement age and facing poverty rates close to 12 percent.”
This is not a happy picture.
Examining data from the 2012 Survey of Income and Program Participation (SIPP) data from the United States Census, the study “examines the distinct challenges posed by the current retirement system of Social Security, pensions, and savings for working-age women, retirement-aged women, and retired women.”
Here are 7 retirement challenges women are facing.
1. The need to work longer.
The study found that labor force participation among women ages 55–64 increased from 2000’s level of 53 percent to 59 percent in 2015, after hitting a peak of 61 percent in 2010.
In addition, “women work well into their retirement years and some may not retire at all.”
A combination of investment losses from the Great Recession and a need to make up for lower career retirement savings is likely responsible — particularly since women’s longer lifespans mean they will need more money than men to see them through retirement.
2. The eligibility gap in retirement plans.
Despite the fact that in 2012 women were “somewhat more likely than men” to have jobs in which employers offered retirement plans, that doesn’t mean they were able to participate.
While the eligibility gap limiting women’s participation has narrowed since 2006 (in 2012, 89 percent of men whose employers offered a plan were eligible, compared with 85 percent of women), and men and women now have the same overall participation rate, women do still have obstacles to overcome to be eligible: higher rates of part-time employment and shorter job tenure.
3. The percentage of women working for employers offering defined contribution plans has shrunk, and the median value of their accounts is a third lower than that of men’s.
The share of women working for employers that offered only defined contribution (DC) retirement plans shrank from 49 percent in 2009 to 46 percent in 2012.
The lower median value in their accounts is partially due to the fact that women tend to contribute less to their accounts — but another contributing factor is women’s dislike of risk.