Older Minority Women Need Retirement Help Now

(WOMENSENEWS)–As members of Congress are now contemplating more assistance for those who are already well off, they should also look to those Americans who are most in need: the millions of older women, especially minority women, who are quietly and too often desperately struggling through retirement in poverty. Fairness requires nothing less.

The outcome of congressional battles over the White House tax-cut proposal–when issues such as retirement reforms normally are taken up–isn’t likely to do this. When that battle ends it is likely that upper-income workers and investors, and some in the middle-income bracket, can expect much more than a little extra jingle in their pockets. For these Americans, congressional leaders are supporting ambitious new tax breaks; raising the amount of income-tax deductions for stock market losses, increasing the contributions ceiling on retirement accounts, reducing or even eliminating taxes on stock dividends and permanently abolishing the estate tax.

Meanwhile, what about helping the less fortunate among us? The nation did succeed in reducing the overall poverty rates among elderly Americans over the last several decades, but poverty remains persistently and alarmingly high for older women of color. Today, four out of 10 single black women over age 65 and nearly five out of 10 older and single Hispanic women live in poverty; a rate twice that of white women of the same age.

Most Laborious Jobs Are Followed by Leanest Retirements

These are women who labored through their working years at low-wage jobs with few, if any, benefits. They cleaned homes, provided care for other people’s children, clerked in stores, waited tables in restaurants and tended the sick and infirm in hospitals and nursing homes. All too often, they end up entering their retirement years and confronting the financial demands of aging with fewer pensions and less personal savings that any other group of workers in America’s population.

For an adequate retirement that will sustain them above poverty, most workers rely on income from a financial "three-legged stool" of pensions, personal savings and Social Security benefits. However, significant numbers of African American, Asian American and Hispanic women are coming up short in all three income categories. Only 15 percent of older black women and 8 percent of Hispanic older women received pension income in 2000. For those working today, just 38 percent of black women, 26 percent of Hispanic women and 38 percent of Asian and Pacific Islander women are covered by any sort of pension in the workplace.

While elderly women overall typically have extremely modest retirement savings and investments, minority households have even fewer financial resources to rely upon. Older black households, for instance, have an estimated median net worth of just $13,000, compared with a median $181,000 for older white households. As a result, for most older minority women, Social Security has become the most important, and too-often sole, source of retirement income. In fact, without Social Security benefits, 62 percent of black women and 57 percent of Hispanic women would be destitute.

Practical Solutions to the Problem

Helping women of color lift themselves out of the shadows of America’s economy requires neither monumental new efforts nor massive investments of government dollars. A handful of practical changes in the laws governing the nation’s retirement system could provide low-income minority women with much greater financial security in their older years. Increasing pension coverage for lower-wage, part-time and temporary workers would provide critical, additional income for retirement. So, too, would making pension division upon divorce more equitable for women, increasing Social Security’s survivor benefits and giving women Social Security work credit for care giving.

A significant source of the deep income gap minority women face in retirement is due to the low-paying jobs they have held in their working years. Good-paying jobs require skills and education. And that means more than a high-school diploma.

Minority women have been making impressive strides in achieving the education that those better jobs demand. Since 1974, the number of Hispanic women attending college has soared by 265 percent, and three times as many black women now hold college degrees. Nevertheless, they still lag far behind white women and men with higher-education degrees. Expanding federal scholarship and education-loan programs would go a long way toward truly opening the doors to higher education and higher-wage jobs for women of color.

The steps Congress takes now will decide whether these Americans will endure a bleak retirement or be able to enjoy their years after a lifetime of work with some comfort and safety. Improvements would include: examining pension and Social Security reforms together as part of a cohesive retirement policy; increasing opportunities for low-income women to build wealth through what are known as "individual development accounts;" simplifying complicated tax credit programs so that more low-income people can take advantage of them; providing financial education for those who are eligible and exempting some amount of retirement-account assets so that low-income people might, for instance, hang on to some of their 401(k) accounts or other savings and still qualify for Supplemental Security Income under the federal poverty program.

Cindy Hounsell is executive director of the Women’s Institute for a Secure Retirement, a nonpartisan and nonprofit advocacy group based in Washington, D.C., devoted to improving the long-term financial security of women. Pat Humphlett is WISER’s program director.