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What Could Help Women Facing Financial Challenges for Retirement

Recommendations from a Senate hearing and a thinktank briefing

By Kerry Hannon

The financial challenges women face to achieve financial security in retirement can be huge, as a Senate Special Committee on Aging hearing and an Employee Benefit Research Institute (EBRI) briefing last week demonstrated starkly. And with the rising cost of health care, as well as other deep-seated economic factors at play, the anxiety has heightened considerably.

Financial Challenges
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Fortunately, as the Senate hearing  (Financial Security in Retirement: Innovations and Best Practices to Improve Saving) and the EBRI briefing (Special Considerations Women Face in Retirement Security) demonstrated, women’s financial security is on the front burner in political and public policy discussions.

Financial Barriers for Women

Put simply, the barriers to accumulating wealth for women are daunting.

At the Senate hearing, Linda Stone, a Women’s Institute for a Secure Retirement (WISER) fellow and volunteer member of the Society of Actuaries committee on postretirement needs and risks, laid the urgency on the table.

“There are 5.7 million more women than men at age 65, and 67 percent of the over age-85 population are female,” she said.  What’s more, she added, “one out of two women in their mid-50s today will live until age 90.”

Many people age 85 and over — especially women — end up near-poor or in poverty, even if they have never been poor before, Stone told the Senators. “Women face greater longevity risk than men, due to their longer lives and the resulting need for more income. Social Security reports that, on average, women have nine years with zero earnings, and women’s careers average 29 years compared to 39 years for men.”

Women's Higher Risk for Falling Into Poverty

Stone reminded the Senators that due to the gender mortality difference and the fact that many women marry older men, they are more likely to outlive their partner and to be living alone, increasing the likelihood of falling into poverty.

The financial implications can be dire, especially if women spent their financial resources on an ailing husband’s health care at the end of his life.

“The reality of today’s retirement landscape is do-it-yourself and do it right, or live at or below the edge of poverty in what are supposed to be your golden years,” Stone said.

She noted that as women change jobs, many don’t grasp why they shouldn’t cash out their retirement-plan balances, no matter how tiny and why that leaving the money alone can make a big difference at retirement.

A Senator's Revealing Story

Sen. Susan Collins (R-Maine) agreed, candidly citing her personal experience. She’s still kicking herself for cashing out her retirement-plan savings to buy a car in her mid-30s.

“The worst financial decision I ever made which was when I left the Hill as a staffer with almost twelve years of retirement contributions. I withdrew all of the money to buy a car,” Collins, the Chairman of the Senate Special Committee on Aging admitted at the hearing. “I swear if just one person had said to me when I filed to withdraw the money, ‘Do you really want to do this? You’re already vested and the implications are enormous and there is nothing wrong with getting a car loan.’ I was just thinking ‘Oh I can’t take on debt.’ It was truly such a bad decision.”

What Could Help Women Achieve Financial Security in Retirement

To help women achieve financial security in retirement, Stone made these three suggestions:

  • Study ways to offer retirement protection to women who spent significant time as caregivers. For instance, look at the possibility of providing Social Security credits for that time.
  • Encourage employers to offer retirement plans and make it easy for them to do so.
  • Let part-time and temporary workers participate in employer-sponsored retirement plans

After attending this hearing, I sat in on the EBRI briefing conducted by Jack VanDerhei, the group’s director of research, and Anna Rappaport, chair of the Society of Actuaries Aging and Retirement Strategic Research Program.

Why Do Women Save Less Than Men?

The moderator, EBRI CEO Lori Lucas, offered a variety of potential reasons women save less for retirement than men. “I have heard it framed as psychological; perhaps the topic is more intimidating and unappealing to women than men. Another theory is that the financial industry is male-oriented and women don’t feel included and therefore don’t participate in financial planning as much. And there are some who believe the barriers women face are mostly, if not all, circumstantial,” Lucas said, pointing to the gender pay gap, as an example.


When VanDerhei unveiled EBRI’s latest research on retirement savings, he  showed that Gen X women fall behind men in their age cohort. The average retirement shortfall for single Gen X women, VanDerhei said, was $72,883 compared to $37,690 for single men.

EBRI also found gaps for women who were married and whose spouse died first as well as for women at higher incomes. You can find the in-depth analysis of the research models here.

Rappaport said her study has shown that women tend to have a planning horizon that is way too short. Women, she noted, tend to look at current income and expenses on a fairly short-term basis and don’t plan for financial shocks. That is a big problem.

Financial Cautions for Women

Rappaport cautioned women to be careful about giving away too much money to their adult children or quitting their jobs for caregiving duties. She also encouraged women to take the time to understand family finances

My week wrapped up reading the Squared Away blog by Kimberly Blanton of the Boston College Center for Retirement Research, “Women’s Wealth Gap Exceeds Pay Gap.” Blanton wrote: “If the difference in men and women’s pay is a gap, then the wealth difference can only be described as a chasm.”

As evidence, she pointed to a 2018 report showing that median net worth for women age 45 to 65, adjusted for inflation, actually declined over the past two decades. Older women of color saw the largest decline in their net worth, according to the report, conducted by the University of Pennsylvania’s School of Social Work and the nonprofit Asset Funders Network.

Public Policies That Could Help

The takeaway from the events and research: there’s a strong need for more public policy initiatives to help women save for retirement, such as state IRA programs like CalSavers and OregonSaves for workers who don’t have employer retirement plans, especially at small employers.

Said Sen. Collins: “At the federal level, we must continue to look for ways to help employers who wish to do so to start their own retirement plans for their employees.” She and Sen. Maggie Hassan (D-N.H.) just introduced the Retirement Security Act of 2019 to help make that happen.

Last year, Collins and Senator Mark Warner (D-Va.) introduced a related bill, the SIMPLE Plan Modernization Act. “We know that when full-time employees have access to retirement plans, on average, 85 percent will contribute,” Collins said. “Clearly, increasing access to employer sponsored plans is a vital part of ensuring retirement security.”

Subcommittee member Senator Bob Casey (D-Pa.) noted that he’d introduced a bill to boost Social Security benefits for women: the Surviving Widow Income Fair Treatment Act. It would eliminate arbitrary rules that substantially reduce a widow’s benefits.

As EBRI’s Lucas remarked: “Lots of food for discussion.”

Indeed. And time is of the essence.

Photogtaph of Kerry Hannon
Kerry Hannon is the author of Great Pajama Jobs: Your Complete Guide to Working From Home. She has covered personal finance, retirement and careers for The New York Times, Forbes, Money, U.S. News & World Report and USA Today, among others. She is the author of more than a dozen books including Never Too Old to Get Rich: The Entrepreneur's Guide to Starting a Business Mid-Life, Money Confidence: Really Smart Financial Moves for Newly Single Women and What's Next? Finding Your Passion and Your Dream Job in Your Forties, Fifties and Beyond. Her website is Follow her on Twitter @kerryhannon. Read More
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