NCPA Study Shows Women More Likely to Retire in Poverty Due to Work, Investment Patterns
WASHINGTON, D.C. (March 1, 2002) — Because women are more likely to be alone in retirement, they are more likely to live in poverty. That's why women, even more than men, need a retirement system consistent with the way they participate in the economy, according to a study released today by the National Center for Policy Analysis (NCPA).
"Elderly women are twice as likely as elderly men to live below the poverty level," said Vickie Bajtelsmit, author of the NCPA study and associate professor at Colorado State University. "The reason is that women are more likely to live alone during retirement and, compared to couples, singles receive less in Social Security benefits, have smaller pensions and less in savings." According to the study:
- Women are more likely to work part-time and for minimum wage.
- They are more likely to drop out of the work force for periods of time to care for family members.
- These activities cause women to lose benefits under traditional employer-sponsored, defined-benefit retirement programs.
- Defined contribution plans, like 401(k)s, give women the flexibility to change jobs and retain savings, but most often women invest too conservatively to build sufficient retirement funds.
"For example, a woman who drops out of the labor market for as few as five years," Bajtelsmit said, "can end up with as much as 30 percent less in her defined contribution retirement program." Although some progress has been made, more needs to be done, Bajtelsmit added:
- Increase allowable contributions to IRAs and encourage broader employer pension sponsorship.
- Increase employment retirement program coverage for part-time workers.
- Provide maximum portability for retirement savings.
"Current public policy unintentionally discriminates against women, and its impact is severe," Bajtelsmit said. "73 percent of elderly poor are women and 14 percent of elderly women live in poverty."
This study will be released as part of the NCPA's Women in the Economy Conference, held March 4 at the National Press Club. Labor Secretary Elaine Chao, Sen. Kay Bailey Hutchison (R-Texas) and Rep. Barbara Cubin (R-Wyo.) are featured speakers, and other groundbreaking NCPA studies highlighting the effects on women of the tax policy, Social Security, and welfare reform will be presented.