March 30, 2020- by Cindy Hounsell, President, Women’s Institute for a Secure Retirement (WISER®), posted on the Social Security Administration’s Social Security Matters blog.
At the Women’s Institute for a Secure Retirement (WISER), we are often asked why we focus on women. The answer is simple.
There are 5.8 million more women than men at age 65. Also, 67 percent of people over age 85 are female. Many individuals age 85 and over end up living in poverty after retirement. Women face greater financial long-term risks than men due to several factors:
• A longer lifespan.
• The need to pay for higher medical expenses.
• The loss of a spouse.
• The looming risk of running out of money.
At age 65, women can expect to live an average of 21 more years while men can expect to live an average of 18 more years. Younger women born from the Baby Boomer generation are also more likely to be single and never married. Additionally, divorce is especially harmful to women’s financial security.
Having more income during retirement is a direct result of the amount of wages earned, saved, and invested during working years and access to employer-sponsored retirement plans. Caring for children, parents, and spouses means some women spend years out of the job market — nine years on average — and those years of zero income are factored into their benefit calculation.
Women are also twice as likely to work part-time to accommodate family needs, usually in jobs with lower salaries and without access to retirement plans. These circumstances result in women having lower Social Security benefits and less money in savings.
In addition, women are in the difficult position of making big decisions while being unable to afford even a small mistake. For example, many women are surprised that their benefits are reduced by 25 percent if they claim Social Security at age 62, and they may not plan for the possibility of widowhood. Many couples may not understand the importance of maximizing the benefit for the surviving spouse; there is a shortfall after the loss of a spouse due to a decrease of one-third to one-half of their monthly benefit amount. We need to educate women about the value of increasing their benefit by replacing “zero” years with “earnings” years and delaying the start of their benefit.
WISER’s goal is to help women make the best decisions they can with the limited resources they may have. Through the National Resource Center on Women and Retirement, operated in partnership with the Administration for Community Living, WISER educates women about the importance of making financial and retirement planning a priority throughout their lives. Starting early, setting up a my Social Security account, learning the rules of the programs they rely on (Social Security and Medicare), and getting good advice can help women prepare for the unique financial challenges they may face in retirement.