Older Women Receive About 80% of Retirement Income That Older Men Receive, Mirroring the Gender Pay Gap  

Caregiving Has Highly Detrimental Impact on Women’s Retirement Preparedness While Divorce Presents Complex Issues for Retirement Savings

Webinar on May 12th to Review Findings

WASHINGTON, D.C., May 7, 2020  – While most Americans are struggling to save for retirement, women face even higher hurdles, largely stemming from the gender pay gap that eventually becomes a retirement wealth gap. Older women  receive about 80 percent of the retirement income older men receive, a disparity that mirrors the gender pay gap.

More specifically, the median household income for women aged 65 and older in 2016 was $47,244 or 83 percent of median household income for men, which as at $57,144.  The research also finds that caregiving, especially spousal caregiving, has a more detrimental economic impact on women, while divorce makes retirement more difficult for women.

These findings are detailed in a new study from the National Institute on Retirement Security (NIRS), Still Shortchanged: An Update on Women’s Retirement Preparedness, available here. The report is authored by Tyler Bond, NIRS research manager, Dr. Joelle Saad-Lessler, Stevens Institute of Technology associate professor, and Dr. Christian Weller, University of Massachusetts Boston professor.

Register at no charge for a webinar on Tuesday, May 12, 2020, at 3:00 PM ET to review the findings and respond to questions.

This report details the inequalities in retirement savings between men and women, examines the sources of income for men and women in retirement and the ways in which they differ, and considers specific factors that are more likely to negatively impact women, such as divorce and caregiving responsibilities. The analysis was developed using data from the 2014 Survey of Income and Program Participation (SIPP), a household-based survey featuring a nationally representative sample interviewed over a multi-year period.

“Even before the COVID-19 financial crisis, the nation was facing a retirement saving crisis, with women already at a significant disadvantage,” said report author Tyler Bond. “As we are on the brink of an economic depression, there is an urgent need to fix the broken retirement infrastructure, especially for women. Going forward, policymakers would be prudent to implement meaningful reforms. For example, changes to Social Security would make a significant difference in retirement outcomes for women – expanding benefits, adjusting spousal benefits and providing caregiving credits. Another solution would be for states to adopt stronger family leave policies to make it less punitive for women to take time out of the labor force to provide caregiving. Also, creating a universal savings vehicle for all workers would give more women a vehicle to save for their retirement, even if their employer does not offer a plan,” Bond said.

“When considering gender differences in retirement income, it is important to remember that women typically live longer than men,” said report author Joelle Saad-Lessler. “Thus, women’s retirement costs over their lifetime are significantly higher because they have to pay for more years of retirement and they spend more years being single in retirement. Essentially, older women are paying for more years of retirement with less money. We also find that married women are better off in terms of retirement savings as compared to single women. But, marriage presents its own retirement challenges given that the structure of Social Security works against dual-earner couples,” she explained.

“Caregiving is a financial and retirement risk that falls most heavily on women, and they often cannot recover,” says report author Christian Weller. “Women already are earning and saving less for retirement than men, and they suffer further economic damage because they are more likely to be caregivers. Some 60 percent of caregivers are women  – caring for children, aging parents who may become dependents, or an ailing spouse. Over time, caregiving can substantially erode a woman’s earnings and savings, further weakening their retirement security. And even when men are caregivers, they can better handle the risks because they typically start from a wealthier position than women,” Weller explained.

The report’s key findings are as follows:

  • In 2016, women age 65 and older had a median household retirement income of $47,244, which is 83 percent of median household income for men ($57,144).
  • Women earn less than men over the course of their career. Men with savings in a defined contribution (DC) plan far surpass the earnings trajectory of women with savings in a DC plan, and earn significantly more than women without DC savings.
  • Women experience a steep decline in income past age 80. Women age 80 and older are much more likely to be widows and widowhood presents challenges on both the income and cost side of retirement.
  • There are stark differences in the sources of income for women in the top and bottom income quintiles. Women with less than $20,000 of income in retirement are much more dependent on Social Security income, whereas women with income above $80,000 receive much more from earnings and property income.
  • Caregiving, especially spousal caregiving, has a strong effect on retirement preparedness, and this particularly impacts women as they remain much more likely to provide caregiving than men.
  • Divorce presents a complex set of issues relating to retirement preparedness. The timing of divorce seems to matter, as does the division of assets following a divorce.

The National Institute on Retirement Security is a non-profit, non-partisan organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers and the economy as a whole. Located in Washington, D.C., NIRS’ diverse membership includes financial services firms, employee benefit plans, trade associations, and other retirement service providers. More information is available at Follow NIRS on Twitter @NIRSonline.