Women and Retirement—Long-Standing Issues and New Developments
By Anna Rappaport
Retirement Section News, January 2023
The typical life cycle for women is different from that of men, leading to disparities in retirement outcomes.[1] Some of the major differences in life paths and situations include:
- Longer life spans for women and longer expected periods of limitations during retirement
- More women than men living alone during retirement
- Women more likely to be caregivers and less likely to have family caregivers
- Lower average earnings while working and fewer total years of paid work and pension credits for women since they are more likely to take time off for caregiving
- Average retirement resources lower for singles than couples and single women averaging lower resources than single men.
2021 was the 25th anniversary of the Women’s Institute for a Secure Retirement (WISER). For the 25th anniversary, I looked at a 25-year perspective on issues affecting women. In this article, I will share observations about the 25-year perspective and observations about what has changed in the last three years.
Where We Are Today Versus 25 Years Ago
In 1992, the U.S. House of Representatives issued a report “How do Women Fare Under the Nation’s Retirement Policies?”[2] Some of the issues raised by the House report included differences in earnings, pension coverage and work histories, higher poverty rates for single women, increasing numbers of older women living alone, link between Social Security benefits and family status, and Social Security integration. Generally, the issues raised in 1992 have not been addressed. WISER started a few years after 1992, so the report offered us a good starting point.
The situation in the United States has changed over the last 25 years. Some of the changes affecting women and retirement include:
- Increasing life spans and periods of retirement
- Vast expansion in technology making remote work feasible
- Aging of the Baby Boom generation leading to large increases in the higher age population with further increases predicted in the future
- Big declines in the prevalence of defined benefit retirement plans and retiree health plans
- Increases in defined contribution plans as primary vehicles for retirement savings
- Growth in gig employment and low benefit jobs
- Small declines in the gender pay gap, but the pay gap still persists
- Increases in the number of women going to college
- Growing focus on racial and ethnic disparities in many areas of society including jobs, pay levels, and access to retirement plans
- The introduction of some state-sponsored retirement savings plans as a way to offer savings plans with payroll deduction to employees whose employers do not offer employer-sponsored plans
Marital status also plays a huge role in retirement security for women, and the U.S. Census Bureau reported in 2019 that only 45.1 percent of women over age 65 are married, whereas 68.6 percent of men in that age group are reported to be married.[3] And what has not changed is that older men are more likely than women to remarry after widowhood or divorce and they are likely to marry younger women.
Poverty rates in 1992 at ages 65 and over from the 1992 report were 7.6 percent for men and 15.4 percent for women. In 2019, poverty rates at 65–69 were 7.5 percent for men versus 9.3 percent for women and at 80 and over, they were 7.6 percent for men and 13.6 percent for women.[4] For women ages 80 and over, the poverty rates were 8.6 percent for women living with others and 18.9 percent for women living alone.[5] For women ages 65 and over living alone, they were 7.9 percent for White (non-Hispanic) women, 10.5 percent for Asian women, 18.6 percent for Hispanic women, and 20.2 percent for Black (non-Hispanic) women.[6]
Social Security and Family Benefits
The Social Security benefit framework is based on the family structure of the 1940s. In the 1940s, there were many wives who were homemakers and who did not have employment outside of the home. Since then, there has been a major increase in the outside employment of wives so that there are many more two earner couples.[7] A couple with a single earner gets a benefit based on the earnings history of the earner, and 50 percent of that benefit is paid to the nonworking spouse while both are alive. After death, the survivor gets the benefit based on the earnings history of the working spouse. In a couple with two earners, the higher earner gets a benefit based on his/her individual earnings. The lower earner gets the greater of a benefit based on personal earnings and 50 percent of the benefit of the higher earner while both are alive. After death, the lower earner gets a benefit based on the earnings of the higher earner. Two earner couples with equal earners each get benefits based on their own earnings. Benefits for single earner couples are based on one person paying FICA taxes even though both members can receive benefits. However, benefits for two earner couples are based on both members paying FICA taxes. Thus, the single earner couples get the greatest benefit per dollar of taxes paid. There have been proposals for changing the method of determining family benefits. One method of change would be to average benefits based on both spouses’ earnings. These proposals have never been seriously considered.
Caregiving and the Situation of Women
Women are much more likely than men to serve as family caregivers. Caring for children, disabled family members, and older family members who have been disabled can be very time consuming, can take caregivers out of the workforce temporarily or altogether, and requires a lot of energy.
Pre-school children can be cared for at home, go to a family member or friend, or they can go to a childcare home or center. School age children need to get ready for school, need supervision after school and during vacations. The U.S. does not have government supported childcare generally available. The situation varies by location, and it is up to every family to figure out what will work for them. Some schools have after-school programs. Some grandparents help with grandchildren.
Some disabled persons at any age and older family members need occasional help that can be scheduled, whereas others need help on a continuous basis. There is a wide variety of needs. Options for support include at home with or without paid caregivers, adult day care, and assisted living and special facilities with higher levels of care. There is a shortage of paid caregivers, and it is costly to have paid caregiving.
The family may be able to predict and plan for the need for childcare as a child grows up. Much of the childcare needs can be predicted, but there can be unexpected interruptions. For example, a child who goes to a childcare center can’t go if they are sick. Sickness within the center may cause a temporary closure. Both childcare needs and availability can therefore be unpredictable, and any system or childcare plan needs some back-up arrangement. For example, some of the jobs that are most available have unpredictable work schedules, making childcare arrangements much more difficult. In recent years, it has been common for employers in food service, hospitality, and retail to give employees schedules for the following week at the beginning of the week with the option to change the schedule during the week. Individuals with professional jobs who may need to work long hours or travel need coverage for the extra hours or when they are out-of-town. If the child-care provider is unavailable, other coverage is needed. Family members can be a very good source of back-up and emergency help if they are available locally. The outlook for childcare is that in the longer term there will be fewer family caregivers to help. Childcare can be very expensive and can be a major barrier to work (and retirement savings), particularly for lower- and middle-income families. Therefore, balancing family needs with job requirements can be very stressful.
Elder care is very different from childcare. The need often gradually increases and may change suddenly if there is a health event. Society of Actuaries research indicates that families are major sources of support, but often with little planning for providing such support. Family support can be supplemented by or replaced by paid care, but it is often difficult to find caregivers, availability of caregivers fluctuates and the care is expensive. Long-term care insurance will pay for some help, but Medicare generally does not. Medicaid finances some help for individuals with very low income and very little assets. Caregivers often end up leaving jobs, taking leaves of absence, or working part-time to balance work and caregiving responsibility. This can be very costly to the caregiver in terms of job security, retirement savings and retirement security.
The Situation in the Last Three Years
During the last three years, COVID-19 has turned the everyday lives of most Americans upside down. In the spring of 2020, most businesses shut down their operating locations and many people started working from home. Other businesses closed for a temporary period. Essential businesses, the post office, truck drivers, public safety, and many health care workers, etc., continued to work at their usual place of work.
School-age children were doing remote schooling, and for many of them, this meant that they learned less and got behind. Childcare centers also shut down and usual support systems, including caregivers, often were not allowed in homes. Social contact was cut off for both children and adults and the situation was very stressful for many people of all ages. During the early stage of the pandemic, there were many COVID cases and deaths in some areas. It was not understood how the disease spread, and there were no vaccines or treatments.
Many of the families with children found that their schooling was not working and at the same time the family support systems and childcare had disappeared. While parents working at home tried to work as well as manage and educate their children, they found it was often a daunting task. Some left their jobs. In addition, some of the parents who had been laid off focused heavily on their children, and they decided not to return to work when they could. Many working mothers dropped out of the workforce, and some of them have not returned. And as we have emerged from COVID restrictions, we have been seeing a surge in childhood viral infections and hospitalizations, which may further complicate and impact working women’s decisions about their careers and participation in the workforce.
A Workplace in Transition
During the COVID pandemic, there was a huge and sudden increase in remote work. Many companies have re-opened their offices to a full in-office schedule or a hybrid work arrangement, but in some of them where workers had a choice, few employees have chosen to return to the office. In the meantime, a number of challenges have been identified with remote work, hybrid work and the state of the workplace today.
Deloitte has released a survey titled Women @ Work 2022.[8] They surveyed 5,000 women across 10 countries. Their survey provides insights into the situation for women in the workplace today. Some of their observations include:
- Many women are experiencing difficult situations that are getting worse.
- Many women are feeling burned out. Fifty-three percent of the respondents said their stress level was higher than a year ago and nearly half were burned out, with many having mental health challenges.
- The survey offered insights for why women were leaving their jobs or expecting to leave—with burnout and lack of opportunities to advance as leading drivers. More than half of the respondents said they expect to leave their jobs within the next two years.
- The respondents did not feel flexibility was a reality for many women. One of the problems was an expectation that they would respond to requests all of the time. Only 33 percent felt their employers offered flexibility, 94 percent felt that requesting flexibility would adversely affect their chance of promotion, and 90 percent believe that their work load will not be adjusted if they request flexibility. (That is a long-standing problem.)
- The survey has distinguished some companies as “gender equality leaders” but most companies are not. Five percent of the respondents say they work for “gender equality leaders.” The responses of women are very different depending on the culture.
- They found that most of the women did not feel that they had a respectful and inclusive workplace culture.
- Hybrid work arrangements offer a chance to deal with some of the challenges of remote work, but they do not seem to be working out well for the respondents. Sixty-four percent of the hybrid workers indicate that their employer has not set clear expectations about how and where they are expected to work. Almost 60 percent of the respondents who were working in hybrid environments feel that they have been excluded from important meetings, and almost half say they do not have exposure to the leaders who could help them with career progression and sponsorship.
- Women in middle management and younger women (ages 18 to 25) were experiencing high burnout levels. Women in ethnic minority groups were more likely to feel burned out.
- The women in the survey reported that harassment and microaggressions are increasing.
- Work-life balance was a major problem for the respondents with only 39 percent feeling they had a good or very good work-life balance.
I have searched out information and had conversations with a number of people who are working remotely and based on these discussions and anecdotes, have the following observations:
- There is a major shortage of workers in the United States. This enables employees to negotiate arrangements that would not have been possible a few years ago. During the pandemic, many women and older workers exited the labor force. It is unclear how many will return.
- Some people, particularly those who are established and experienced, love the chance to work remotely. For people who are on Zoom calls all day, there is not much benefit in being in an office. Remote work saves commuting time and enables greater flexibility about where to live.
- Remote work does not generally work well for young people starting careers and some organizations say that new hires should be in the office for at least two years. Remote work does not work well for people who are trying to grow in their careers and need contact with mentors and sponsors unless specific actions are taken to address these issues. However, none of this will work well unless the experienced workforce is in the office to work with the people who need training and are trying to advance their careers.
- Remote work can lead to expectations that someone will be available all of the time, and it is hard to establish boundaries. Some home environments have a lot of distractions whereas others are very quiet. Some people can control their schedule because they do not interact with others making demands, but others are in the opposite situation. Some home environments have good office working space and others do not.
- In an office environment, people have the opportunity for informal conversation, development of new ideas, etc. Whether this matters depends entirely on the situation. Some people prefer to be in the office. (I do not know how many prefer this).
Remote work can be very lonely and stressful. Some remote workers get little opportunity to meet their bosses in person. I talked to two actuaries recently who are working remotely. One is very young, working 100 percent remotely and was excited when her company scheduled a meeting to get the department together. But it did not work out well, as her boss and some of the other employees did not attend. She had never met her boss face-to-face and it was a challenging situation. The second actuary was mid-career, had been in his job about a year, and had been hired by a former boss. Although he was living far from work, the actuarial team in his company spent a week together at the home office six times a year and they had two more off-site events. The situation seemed to be working very well for him.
Hybrid situations offer promise to get people together more and balance the advantages of being together in an office with some time at home. The Deloitte study respondents however did not find them to work well. In my conversations with people, I have heard stories about companies reopening their offices and establishing hybrid arrangements but finding that few people are coming to the office. Some companies are establishing new rules for such arrangements. More work is needed to make them work well. It is a time of transition, and it remains to be seen how work will be structured in the future.
Some office space had already been modified or repurposed. There is a lot of office space in many locations that is not being used much at present. As leases expire and companies make decisions about how they will structure work, it is likely that much more of it will be repurposed.
At the 2022 Society of Actuaries impACT meeting, there was a session on Women’s Leadership Issues. The discussion focused around “surviving” or “thriving.” My observation was that the underlying issues are parallel to those in the past, and that women are still struggling to find good career options and work-life balance. While many more women hold professional jobs and advance, there are still challenges.
My Perspectives
The situation of women today compared to 25 years ago is a mixed story. Overall, there are positives and negatives and the events of the last three years have added a new list of negatives. I believe that:
- There is a greater awareness of women’s retirement issues than 25 years ago.
- While pay differences have decreased a little, there is growing inequality in the United States with a larger percentage of low paid jobs being occupied by women, and people in many lower-paid jobs have seen flat or declining real pay.
- There are more older women living alone today and this number will continue to increase.
- Social Security family benefit issues have not been addressed and they are not even being discussed.
- The decline in defined benefit and retiree medical plans has meant that employers are bearing much less retirement risk, and employer coverage of disability risk linked to retirement savings has virtually disappeared. Women with longer periods of continuous employment benefit from these risk sharing arrangements when they are in place but fewer are benefiting today, although more women are working for longer periods.
- There are more well-educated women and the opportunities for professional women have increased markedly.
- There are more women in senior positions and in Congress, but huge disparities remain.
- Childcare and elder care became more difficult during COVID, and they are still more difficult today.
- Societal events such as COVID, the Great Recession and climate change have had lasting effects on many people, particularly those at lower incomes and for families who have lost loved ones. The impact of long COVID is unclear. It is unclear how many people will be worse off in the long run.
- While working from home offers advantages for many people and more choices about where to live, it does not support career development, it makes setting boundaries more difficult, and it can add to stress. Given the housing market of the last three years, there are major benefits in being able to move to a less costly area.
- Remote work should offer more opportunities for older employees who prefer a redefined work schedule before total exit from the labor force. It is unclear to what extent the recent environment has opened up new options for older workers.
- While life spans have increased and some people have chosen to work longer or make work a part of retirement, the retirement system has not adjusted to the longer life spans.
Note that the last three years have been a period of major disruption and change. How much of that change will be lasting is unknown. It is also unknown whether women will recover fully what they lost, how long it will take them to do so and how much their opportunities will grow.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.
Anna Rappaport, FSA, serves as chairperson of the Committee on Post-Retirement Needs and Risks. She can be reached at anna.rappaport@gmail.com.