Running on Empty: Women’s Long Road to Retirement Security

Whenever I chart a course - whether it be for a trip, scheduling my day or planning for the future - I am confident of two things. First, I need a map.  Second, I must have tools on hand to avoid – or manage - pit falls on the way to my destination. But, when it comes to planning and saving for retirement, women experience a lot of obstacles that are nearly impossible to overcome.

Imagine heading out for a long car trip and realizing that you can’t go faster than 30 mph.  You’re stuck in the slow lane while other cars whiz by.  For women on the road to retirement, the gender pay gap is a bit like this slow moving car. The average female college graduate  makes just 82 cents to every dollar her male peer earns – a gap that is even larger for women of color. African-American and Latina women earn, respectively, 68 and 62 cents to the dollar.  But, even the slowest drivers will eventually get where they’re trying to go. Not so when it comes to women, pay inequality and retirement security. Over the course of their careers, women earn $1,055,000 less in cumulative wages and salary than men - a number that is too much to make up if they just keep going a little longer.

Then, there are the detours, left turns and off-ramps that come with raising a family, managing a household or taking care of an aging parent or other loved ones. Many women “lean out,” reducing work hours or passing up opportunities for promotions and higher pay. Some leave the workforce entirely. On average, women spend 44% of their adult lives out of the workforce (compared to 28% for men), something that reduces their lifetime earnings, retirement savings, and eventually, Social Security benefits. In 2016, the average annual Social Security income for women 65 years and older was $13,891, compared to $17,663 for men.

It's no wonder women struggle to achieve financial security. As the champions for the 50+, AARP is committed to helping women – and all Americans – reach this critical destination.

So, what are the tools that would make it easier to stay on track?

First and foremost, we need to strengthen Social Security for current and future generations.  It is the bedrock of women’s retirement security.  That’s not hyberbole. It’s a fact.  According to the Social Security Administration, nearly half of all unmarried women 65+ (including widows) who get Social Security benefits relied on the program for 90% or more of their income.

Second, we need to amplify and accelerate the emerging national dialogue about retirement security. At the state level, AARP is working across the country to make workplace retirement savings plans more widely available. Research tells us that people are 15 times more likely to save for retirement if they can set aside money from their paychecks, but right now millions of Americans don’t have this option -- and, women are less likely than men to be offered retirement benefits at work.  In the last five years, nine states and one city have put in place policies that will make payroll deduction retirement plans available to folks who don’t already have them.

In Congress, retirement security is part of the policy conversation for the first time in years.  A bipartisan bill, the SECURE Act, that would, among other provisions, increase tax credits for employers who offer retirement plans and expand 401k participation to long-term part-time workers, is moving through the U.S. House. And, yesterday, AARP Board Chair Joan Ruff testified at a Senate hearing on the challenges in the U.S. retirement system, noting that significantly diminished access to defined benefit pensions, inadequate savings, longer life expectancies and higher health care costs are all factors endangering the retirement of millions of Americans.

I’m heartened by the traction we’re seeing on state policies and the willingness in Congress to start these conversations.  There is a constituency out there that is multi-generational -- what I call the “family economy constituency.”  Folks are concerned about their futures and the futures of their families, whether it’s Boomer parents helping Millennial kids struggling with student loans or Millennial and Gen Z kids taking care of aging parents and other loved ones.

But, we need to do much more.  As the inimitable Yogi Berra once said, “If you don’t know where you’re going, you’ll end up someplace else.”  We know where American families want to go – a secure retirement.  As with any successful journey, they need to have an up-to-date toolkit and even a course-correction or two to reach their destination.

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