Why are so many retired women poor?

poor-old-ladyThe National Institute on Retirement Security (NIRS) has issued a new report stating that women are 80 percent more likely than men to be impoverished at age 65 and older.

The report,  Shortchanged in Retirement, The Continuing Challenges to Women’s Financial Future,  proposes, among other things, strengthening Social Security benefits for women to reduce their vulnerability to financial hardship as they age.

Diane Oakley, NIRS executive director and report co-author, says women are  “financially disadvantaged because we still earn less than men and we typically take time out of our careers for caregiving – both of which reduce our ability to prepare for retirement.” The NIRS report also notes that women more often work for employers that do not offer a retirement plan and  women face more years in retirement because they live longer than men.

All of this is true but it is disappointing that the NIRS  does not even acknowledge a major problem facing older women – age discrimination in employment.

The NIRS report reflects the sad fact that age discrimination in employment is invisible, even to those who should know better.

Women are pushed out the workplace earlier than men and then find it far more difficult to get a new job. Women are forced to spend down their savings and take poorly paid part-time or temp work, which limits their ability to save. The median income of women age 65 and older is consistently 25 percent lower than the median income of men of the same age.

Women age 65 and older also suffer a 29 percent gap in  Social Security benefits compared to men. The NIRS fails to note that the Social Security Administration’s benefits formula perpetuates past sex and age discrimination suffered by women because it is based solely on wages earned for the past 35 years. Moreover, because older women disproportionately experience age discrimination in hiring, many are forced to retire as soon as they can,  at age 62, which cuts their monthly Social Security benefit by at least a 25% for the rest of their lives. The average Social Security income received by women 65 years and older was only $13,824 in 2014, compared to an average benefit for men of $17,911.

The NIRS also notes that women fare worse them men with respect to pensions and 401(k) type retirement accounts. In 2010, men received $17,856 in median retirement income from a pension, whereas women received $12,000— 33 percent less.  In 2014, the median amount accumulated in these savings accounts was $36,875 for men and $24,446 for women— 34 percent less.

The NIRS notes that more women today are spending their retirement years working. The NIRS report found that labor force participation among women aged 55 to 64 climbed from 53 percent in 2000, to 59 percent in 2015, with a peak of 61 percent in 2010.

This NIRS report is based on  the 2012 Survey of Income and Program Participation (SIPP) data from the United States Census.

The National Institute on Retirement Security is a non-profit organization based in Washington, DC, that works to foster a deeper understanding of the value of retirement security to employees, employers, and the economy as a whole.

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