Women’s Uphill Battle for Financial Security

As AARP pursues its mission of helping older Americans choose how they live as they age, we focus a lot of our attention and activities on financial resilience . . . helping our constituency plan for – and ideally achieve – a secure retirement.  In doing this work, we see that women face a number challenges that can leave them financially vulnerable.

On average, women live longer than men, so their retirement savings need to stretch farther into the future. And their wages tend to be lower, making it harder to save. This gender pay gap starts early – one year out of college, women earn 7% less than men – and compounds over time, particularly as women juggle employment with raising kids. Some take the “mommy-track,” putting in fewer hours or taking on less time-intensive roles and assignments. And, three out of ten women who have children under 18 are not in the labor force at all. These choices mean forgoing higher pay and long-term economic security.

What gets less attention in our national dialogue is the impact that caring for other loved ones – like aging parents and spouses – has on women’s financial security.  Sixty percent of America’s 40 million family caregivers are women. Of those, 14.3 million are balancing taking care of a loved one with paid employment. On average, family caregivers devote 24.4 hours per week on caregiving responsibilities, but women can spend half again as much time on these tasks.

Similar to the impact of raising children, women family caregivers make hard choices to accommodate both caregiving and earning a living.  Many “lean out” at this stage in their professional and personal lives, passing up promotions or job opportunities that would throw off the tenuous balance between work and family responsibilities. We often hear stories like this one from Jennifer who adjusted her work life to take care of her mother, saying “First, I downsized my job to part-time hours and then, two years later, took an early retirement so I could spend 3 months with her.”

Decisions like Jennifer’s – which are expressions of love, to be sure – have an immediate impact on caregivers’ earnings and retirement savings as well as long-term implications for Social Security benefits.  Ramping down to part-time work can mean not being eligible for a workplace retirement plan, and reducing hours means lower earnings so it’s even harder to save. One study estimates that a woman taking care of an aging parent could lose around $120,000 in wages from reduced working hours and $142,000 in wages if she leaves the workforce early.  Either way, her Social Security benefits will be reduced . . . by $64,000 if she works fewer hours and by $131,000 if she stops working entirely.

This is a multi-faceted problem that requires “all of the above” solutions. We need action to give more workers access to retirement savings plans that use simple payroll deductions to set money aside for the future, and Social Security should be updated to account for women’s role in today's workforce and the personal obligations many must balance.  In addition, state and federal policymakers as well as employers need to do more to support family caregivers who are the backbone of our long term care system.

AARP is working on all of these fronts. Making sure that Social Security is strengthened to meet the needs of current and future generations is at the heart of our social mission agenda, and we are championing “Work & Save” plans across the country to help more Americans save for their retirement.  Through our state and federal advocacy, we’re leading the charge to develop and implement policies that support family caregivers. And, we’re working with employers large and small to help them create caregiver-friendly workplaces. Our caregiving toolkit for employers has tips, checklists, no-cost and low-cost solutions to guide businesses, as well as lists of resources, such as AARP’s Prepare to Care guide, that they can distribute for free to their employees who have family caregiving responsibilities. It’s time that we recognize the important role women caregivers play keeping America's families healthy and strong. They shouldn't have to sacrifice their own financial security as a result.

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