Cindy Hounsell

(WOMENSENEWS)–On Oct. 16, Kathleen Casey-Kirschling, a schoolteacher from New Jersey approaching her 62nd birthday, filed for Social Security retirement benefits.

Marking the start of a wave of boomer retirements–thousands could apply for Social Security daily over the next 20 years–the much-publicized event spotlighted an issue that quietly threatens U.S. women: tiny incomes in old age and a heavier dependence on Social Security.

About 71 percent of older Americans living in poverty were women in 2003, according to the Population Resource Center in Washington and Princeton, N.J.

Currently, more than half of Social Security beneficiaries are women, and women are an even greater proportion of beneficiaries over the age of 85.

That means women in Casey-Kirschling’s generation can be expected to depend disproportionately on Social Security and to increasingly join men in working longer in paid employment.

The participation of older women in the paid work force has steadily increased over the last decade, according to the U.S. Department of Labor.

In 1986, about 22 percent of women over 55 were working; in 2006 that had risen to 32 percent, getting nearer to the 44 percent of men who work past 55.

"We’re going to have to see a lot of women who are baby boomers have to continue to be in the work force," says Linda Block, a financial planner in Arizona who has worked on financial seminars to educate women.

Out of Campaign Spotlight

In the presidential primaries candidates are offering competing ways to help citizens save, but so far none has come up with a program that focuses on women and the retirement gap in particular.

On the whole, Democratic candidates favor tax breaks to specifically spur retirement savings while Republicans are favoring tax cuts that are not tied to any specific goal but could be used to save.

Among the Democrats, John Edwards, former senator from North Carolina, unveiled a retirement plan Oct. 26 as part of a larger "corporate accountability" push. It entails portable retirement accounts for workers and matches the first $500 in savings with a tax credit. It would require companies to create retirement savings accounts for employees who aren’t able to access pensions and to pressure corporations to close other pension loopholes, such as calling employees "consultants."

New York Sen. Hillary Clinton’s proposal would offer a 401(k) plan to middle- and lower-income taxpayers. At an estimated cost of $25 billion a year, it would be funded by taxes on multimillion-dollar estates, Clinton’s team said.

A 401 (k) account allows employers to pay a portion of salary into a retirement savings account, which is not taxed until the account holder withdraws the funds during retirement.

Clinton also promised that her proposal would operate independently of Social Security, which some say could run out by 2041.

Illinois Sen. Barack Obama promises that he will eliminate all income tax for seniors making less than $50,000 a year to help them put aside savings.

On the Republican side, Mitt Romney, the former Massachusetts governor, says he favors a tax cut for families making less than $200,000 a year, which would give families extra money to invest in savings. He has reportedly considered cutting funds for both Medicare and Social Security.

Arkansas Gov. Mike Huckabee’s "fair tax" proposal would eliminate income taxes altogether, replacing them with a flat sales tax which he feels would put saving and spending plans back in the hands of citizens but detractors say would place a disproportional tax burden on those with lower incomes.

Rudy Giuliani, the former New York City mayor, has indicated that he might be open to shifting some of the Social Security trust fund into privatized accounts to give people "choice" on how to save their money.

Deferring Savings to Pay Debts

Some women defer saving for retirement because their income covers only current basic expenses, including health care costs.

"You can’t be saving for retirement if you’re paying however much families are paying when it comes to health insurance," says Cindy Hounsell, president of the Washington-based Women’s Institute for a Secure Retirement, or WISER.

"Health insurance is so critical," Block agrees. "And we know that we don’t have resources because there’s money that’s going elsewhere right now. These are major concerns."

According to the 2005 data from the U.S. Census Bureau, women earn 77 cents for every dollar earned by men. Because pension plans and Social Security are calculated from wages, women are at a collective disadvantage, and because they earn less they have fewer opportunities to save.

Furthermore, women are more likely than men to take time out of work–from caring for kids to caring for elderly relatives–further reducing earnings. Longer life expectancy also means that women need to stretch savings longer, especially as they outlive their husbands and their incomes.

But while these disparities are widely known by financial planners, they are still not widely understood, says Block, the financial planner in Arizona. "For some women, it’s not even on their radar screen to be thinking about retirement," she says.

When women do focus on the issue it can be distressing, the Heinz Family Philanthropies, based in Pittsburgh and Washington, found in April 1998.

In a survey of 1,500 people–1,000 women and 500 men, of whom one-third were African American or Hispanic–the foundation’s research indicated that half the women between 25 and 55 surveyed were afraid that after their retirement they would struggle to make ends meet.

Pushing for Education

"My big push is education because the system isn’t working anymore. It’s not working for anyone," says Hounsell.

WISER has teamed up with the Heinz Family Philanthropies to create, an online book with step-by step advice and instructions for women planning their financial futures.

Women already struggling with balancing work and family obligations can feel daunted by the sheer volume of information and options, advocates say, so initiatives like the e-book are intended to help make the process less intimidating.

The Heinz Family project is just one of many programs that seek to educate women in particular.

Wise Up, an initiative of the Women’s Bureau at the Department of Labor, is a curriculum of financial literacy–including teleconference calls and Web seminars–so younger women can plan ahead. Advice is phrased as plainly as possible to be more accessible to a wide range of women.

"Sometimes people who are trying to convey financial education don’t do it in simple enough language," says Jane Walstedt of the Women’s Bureau. "Even in curriculum, I’m finding words like ‘asset.’ There’s a lot out there, but the challenge is to make it not overwhelming."

The same intimidating feeling can prevent women from taking the first step and opening a savings account. In this area too, retirement planners say building up from an attainable goal is important.

"Just start somewhere; start with something. It’s part of taking control of one aspect of your life," says Block.

Sarah Seltzer in a New York-based freelance writer and the editorial intern at women’s eNews.


For more information:

What Women Need to Know About Retirement:

WISER, Women’s Institute for a Secure Retirement:

AFL-CIO, Working Families Vote 2008:

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