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The Financial Challenges Facing Older Women

They can be enormous and painful, especially for low-income women


(Editor’s Note: This story is part of a partnership between Next Avenue and Chasing the Dream, a public media initiative on poverty and opportunity.)

It’s hard not to get a little down about the financial challenges many women over 50 face. I heard a lot about them recently while moderating and attending panels at the American Society on Aging’s (ASA) 2018 Aging in America Conference and the What’s Next Boomer Business Summit in San Francisco.

One session I sat in one, Fifty and Forgotten: A Focus on Wealth and Women in Their Fifties, was especially painful — yet exceedingly important.

There, Kevin Prindiville, executive director of Justice in Aging (a nonprofit legal advocacy group fighting senior poverty) and a Next Avenue Influencer in Aging, painted a somber portrait of poor, older American women. One of his slides: The median income of women 75 and older is about $13,000 less than of older men — $19, 043 vs. $32, 572.

Highest Poverty Rate: Black Women 65+

Moreover, Prindiville noted, women of color age 65+ are at the greatest risk of living in poverty. Black women that age have the highest rate of poverty (21 percent), followed by Hispanic women (20 percent) and Native American women (19 percent), roughly double the poverty rate of white women 65 and older (10 percent).

(Teresa Ghilarducci, a labor economist, recently predicted in The New School Retirement Equity Lab blog that when the next economic downturn begins, older black workers will be disproportionately laid off and experience higher rates of unemployment than older white workers. When unemployment peaked in 2011, black older workers’ unemployment rate grew to 10.1 percent, 3.6 percentage points higher than  white older workers at 6.5 percent — the largest gap in the past 15 years.)

Fear of The ‘Bag Lady Syndrome’

The “bag lady syndrome” so many women fear, is not that far-fetched for many females over 50. Due to their low pay, lack of employer-provided retirement plans and increasingly longer life spans and higher medical costs than men, they’re slammed from all sides as they age. Lower earnings directly correspond to an inability to accumulate savings.

As I wrote in this Next Avenue post, many women over 50 are in a jam for retirement partly because they take time out of the workforce for elder care and raising kids. Those workplace breaks cause them to lose potential raises, lower how much they’ll collect from Social Security and give them fewer years to sock away money in a retirement plan at work (and get contributions matched by their employers). In addition, if they lose a partner due to death or divorce, as often happens, their standard of living commonly drops.

The Wealth Gap for Older Women

Another panelist, Jhumpa Bhattacharya (vice president of programs and strategy at the Insight Center for Community Economic Development), zeroed in on the wealth gap between older women and older men. “Wealth — what you own minus what you owe — is the key to ensuring economic security,” she said.

Bhattacharya pointed out that men in pre-retirement age (50 to 64) have 1 ½  times the wealth of women that age — $60,500 compared to $38,200. Women’s lower wages make it harder for them to pay off student loans; a higher debt load leads to a lower net worth and thus less wealth. It can also produce defaults, preventing some women from landing mortgages to build home equity.

Credit: Fifty and Forgotten: A Focus on Wealth and Women in Their 50's

Bhattacharya was particularly concerned about the significant financial challenges facing older women of color.

A 2017 paper she wrote with her group’s president Anne Price (also a panelist) and researchers from the Samuel DuBois Cook Center on Social Equity — Women, Wealth and Race — noted how older black and white women are often in different financial circumstances because white women benefit more from wealth being passed down from their families.

“Intergenerational transfers like financing a college education, providing help with the down payment on a house and other gifts to seed asset accumulation are central sources of wealth building,” the paper said.  “When we examine women’s wealth near retirement (ages 60+), we see that white women are better positioned for stable retirement. This is especially the case if they are married and college educated, since they have nearly two times the wealth of black married women with bachelor’s degrees.”

And single black women age 60+ without a college degree have a mere $12,000 in wealth (median figure), in stark contrast to the $384,400 in median wealth among single white women with a bachelor’s degree.

Credit: Justice in Aging Fighting Senior Poverty Through Law

The Effect of Family Caregiving on Wealth

Even accumulated wealth, however, can dissipate seemingly in a blink of an eye, when women over 50 shoulder the cost of caregiving.

At a What’s Next Boomer Business Summit panel I moderated, Surya Kolluri, managing director of policy and market planning at Bank of America Merrill Lynch, cited a Merrill Lynch/Age Wave report noting that women are 66 percent of all family caregivers and nearly twice as likely as men to provide care from their 40s through their 60s. On average, caregivers spend $7,000 on caregiving per year; many contribute far more.

Sometimes, women find the indirect financial costs of caregiving  — lost hourly wages, reduced Social Security benefits and the missed opportunity for 401(k) contributions — especially high. A woman who leaves the workforce for caregiving loses an average of $324,000 in wages and benefits compared to $284,000 for a man who takes time off for caregiving. Women are also three times more likely than men to retire earlier than expected so they can become a family caregiver.

Another panelist, Susan Weinstock, AARP’s vice president of financial resilience programming, urged employers to do more to help their staffers — men and women — who are also family caregivers. She discussed a range of supports from flexible work schedules to subsidized in-home, back-up care.

Scammers Pose a Financial Challenge

One last financial challenge facing older women (possibly your mom): scammers. Since women live longer than men, generally, and are often single in their 80s and 90s, they’re frequently easy prey for con artists hoping to separate them from their money.

Panelist Howard Tischler, co-founder and CEO of EverSafe (a tech company that provides a daily monitoring service to detect suspicious financial activity and identity theft), told the story about what happened to his mother, Harriet, when she was a retired accountant living alone. Even though his mom was legally blind and didn’t have a current driver license or car, she’d been sold a monthly deluxe auto club membership. Her son also discovered that a “friend” who had offered to help his mother with her bill paying had instead stolen money from her, wiping out her savings. Tischler and his brothers stepped in to support their mother for the rest of her life.

If that had happened today, Tischler told the audience, “I’d have the talk about retirement finances with her early on and arrange for a financial power of attorney. I would block automated callers with a service such as Nomorobo. I’d set up bill-payment service such as Silver Bills. And, of course, I’d pay for an account monitoring service like Eversafe that would alert caregivers to suspicious activity.”

For many women over 50, talking about money and seeking solutions to financial challenges is a taboo subject. But it’s a conversation that can’t be overlooked — the future repercussions are too bleak.

This story is part of our partnership with Chasing the Dream: Poverty and Opportunity in America, a public media initiative. Major funding is provided by The JPB Foundation. Additional funding is provided by the Ford Foundation.

By Kerry Hannon
Kerry Hannon has covered personal finance, retirement and careers for The New York Times, Forbes, Money, U.S. News & World Report and USA Today, among other publications. She is the author of a dozen books including Money Confidence: Really Smart Financial Moves for Newly Single WomenGreat Jobs for Everyone 50+: Finding Work That Keeps You Happy and Healthy...and Pays the Bills, Getting the Job You Want After 50, Love Your Job: The New Rules for Career Happiness and What's Next? Finding Your Passion and Your Dream Job in Your Forties, Fifties and Beyond. Her website is kerryhannon.com. Follow her on Twitter @kerryhannon.

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