Baby-boomer women must and should take retirement-planning matters into their
own hands and not wait on government or business to solve the looming problems
that await three-quarters of the 40 million women born between 1946 and 1964.
« Baby-boomer women are in trouble, » said Paul Hodge, director of Harvard
Generations Policy Program and editor of the just-published study, « Baby Boomer
Women: Secure Futures or Not? » « Unlike any other time in our nation’s history,
unless there are dramatic policy shifts, in terms of absolute numbers,
baby-boomer women, most particularly minority women, will find their elder years
to be a ‘never ending’ struggle. »
According to Hodge, this study is the first to detail how bad off baby-boomer
women really are and what needs to happen to solve their problems. A look at the
findings:
Change gender-biased retirement policies
For starters, policymakers have long ignored the needs of women and have largely
ignored the plight of women approaching retirement who don’t have enough
resources to fund their golden years.
« Most retirement policies, government and private, are gender-biased toward
white males, » Hodge said. « This needs to change quickly. If we don’t deal with (these
policies) we have a ton of minority women living below the poverty line with no
safety nets in place. »
Social Security and pension plans are designed to work well for people with
stable career employment, he notes. But women typically don’t have stable
careers. So, under current Social Security rules, he says women are « punished »
for being out of the labor market — for taking care of children, providing care
to elderly parents and the like. Social Security credits are based on wages
posted to a person’s Social Security record. No wages equals no credits. In the
European Union, however, Hodge says women are not penalized for being out of the
labor market.
« It’s not a hair-brained idea » to give Social Security credits to American women
who are out of the labor force, he said.
In addition, Anna Rappaport, president of a consulting firm bearing her name and
a contributor to the study, writes that U.S. policymakers should reduce barriers
to « phased retirement » to improve the financial and retirement futures of aging
boomer women.
Work sooner, work longer
Hodge also says many boomer women will have to work longer, well into their 60s
and beyond, to make up make up for shortfalls in income during retirement. « Given
the enormous gains in health and life expectancies, working longer is the only
logical way for many women boomers to acquire much needed income, » Hodge said.
The need to work longer is a result of several factors: Half of working women
don’t have access to pension or other retirement plans and most working women
don’t necessarily earn enough to save enough to fund their retirement years —
those working full-time earn only 76% of what men earn. About 50% of boomer
women are working and will work in low-paying jobs.
Fewer supports
Baby-boomer women are more likely to be divorced or never married. And that too
will create the need for women to either keep or start working. Unfortunately,
Hodge says boomer women, even though they have greater education and stronger
labor-force participation than previous generations, won’t receive as much from
the retirement-income system as their predecessors.
Of course, not all baby-boomer women will be able to work longer. Other studies
suggest half and then some of Americans age 50 and older suffer setbacks of some
type that prevent them from working. « The fate of boomer women could be worse
than their predecessors, as the boomer women spend more, acquire more debt and
are less likely to have traditional pensions, spousal benefits or retiree health
coverage, » said Hodge.
Hodge also says boomer women and those who follow them should establish their
own earnings records as early in their careers as possible.
Don’t depend on home equity
Baby-boomer women who plan on converting their equity in their homes into income
in retirement could be in for a rude awakening if/when housing values level off
or decline. « For boomer women, how financially secure they are likely to be as
they age will be greatly influenced by their present and future housing choices, »
Hodge said.
Fix health care
Hodge also says the U.S. health-care system is failing to meet the needs of
aging boomer women, especially those in the lower socio-economic groups and
among racial/ethnic minorities. For one, women will likely have to pay for their
retirement health benefits. And since they earn less while they are working,
they won’t be able to save for those expense. And since they won’t have enough
income in retirement, they may not be able to pay for those expenses during
retirement, he says. « From 2020 to 2030, when older boomer women will be 64 to
74, they are projected to face an income shortfall of at least $400 billion
dollars, » Hodge says.
Robert Powell is a retirement columnist for MarketWatch, editor of Retirement
Weekly, a subscription-based MarketWatch/Dow Jones service, co-executive
producer of PBS’ « More Than Money, » co-author of « Wall Street Decoded, » author
of « 20 Tips to Retirement Planning, » a member of the expert faculty at the
California Institute of Finance, and a regular contributor for The Journal of
Financial Planning and Solutions magazine. He can also be heard on MarketWatch
radio and makes frequent appearances on MarketWatch’s Weekend television
programs.
SOURCE: MarketWatch.com