Laurie MacNaughton © 2019
Here’s what I’m not going to address, except in passing: the wage gap between the sexes. Why? It’s not because I doubt its existence. Rather, it’s because for most retirees the peak earning years are past, and they are now drawing down savings and investments.
What I am going to address, however, is the wealth gap between men and women during the retirement years.
Meet Rosemary, a woman who has spent her entire adult life caring for loved ones – first her profoundly handicapped brother, and then her Alzheimer’s-afflicted mother. When her mother died last year, Rosemary started looking for a job. At age 66. With no official work history. We’ll come back to Rosemary in a minute.
Retirement income typically consists of investments, savings, and, for most Americans, Social Security. In fact, information published by the Social Security Administration states half of retirees rely upon Social Security for 50% of their income; one in five relies upon Social Security for 90% of his or her income.
But here’s the catch: didn’t work 35 years? You’re not getting maximum benefits no matter how much you earned during the working years, unless you qualify for a spouse’s, or former spouse’s, benefits.
And if you never worked, as in Rosemary’s case – or if you worked fewer than 10 years – you may fall into a group called “never beneficiaries.” People in this category may qualify for no benefits at all, unless they can claim benefits through a spouse or former spouse.
To reiterate, there are two important numbers to understand: first, you have to work at least 10 years to qualify for Social Security benefits. Second, your monthly Social Security payment will be based upon your 35 highest-income years.
Women disproportionately represent never-beneficiaries because they step out of the workforce far more frequently than do men in order to care for children or elderly relatives, and no amount of curing the wage gap during the working years is going to fully close the wealth gap during the retirement years for these women.
For some women it’s a triple whammy: fewer years worked, lower wages paid during those working years. Add to this the fact women, on average, live longer, and you start to see the magnitude of the problem.
So, what are some cures for women already of retirement age? That can be tricky one, as working is simply not possible for some older citizens. However, for those who can work, even a small income can make a big difference. Also, I am a huge believer in the role faith-based organizations play in a community, as well as the effectiveness of service organizations and other non-profits. Some groups will assist the elderly with smaller home repairs, and many offer other forms of assistance. Many of our local jurisdictions have shuttle services for those needing transportation.
And what about prevention? There are many, many things we could do better, but following is some very low-hanging fruit. First, we must offer financial education early enough in life for it to have a meaningful impact. It does no good to start talking to people about retirement finances when they’re so close to retirement age they have no hope of working a minimum of 10 years. Second, we need to reexamine the wage gap and the many, complex reasons it still exists. And we need to take a very close look at things that are working, such as recent legislation passed in Oregon, whereby employees are automatically enrolled in Roth IRAs.
As for Rosemary, she is doing well. She had the great blessing of inheriting her mother’s home, and was able to do a reverse mortgage to help with her finances. She works as a cashier at a local grocery store, and has qualified for basic health care coverage through her employer.
Many of us, at one time or another, have turned to family for childcare or for eldercare. Twice I myself served as the primary caregiver for aging or ailing family members, and feel blessed to have had that privilege. However, circumstances were such that I was able to step back into the workforce. Not everyone is that fortunate. But I believe we, as a nation, ought to insist upon having this complex discussion.
Laurie MacNaughton 703.477.1183 