Still Shortchanged: An Update on Women’s Retirement Preparedness

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.

Still Shortchanged: An Update on Women’s Retirement Preparedness finds that 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.

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.

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.