The Growing Retirement Nightmare for Women
Life + Money

The Growing Retirement Nightmare for Women

Shannon Ingram was earning good money in 2003 as a vice president for a big corporate travel management company and saving steadily in a 401(k) for her retirement. Then she got a call from her stepfather. "Mommy's not doing well and I don't know what to do about it," he said, choking back tears. Ingram’s mother was later diagnosed with vascular dementia.

Ingram and her husband sold their house in Denver and moved to Orange County, Calif., where she spent the next five years caring for her mother. Eventually, Ingram moved her mother and stepfather into an assisted living facility, where she and her sister ended up shouldering the $12,000 monthly bill. After her stepfather and mother passed away in 2009 and 2010 respectively, Ingram went back to work in marketing. But her husband soon lost his job and she was forced to sell their home, move into a rental property, and liquidate their retirement accounts to pay bills. "I don’t even think about retirement,” says Ingram, now 59. “I focus on being healthy because heaven knows we need our health in order to keep working.”

Women like Ingram have transformed the workplace and paved the way for the most educated, high-achieving generation of females ever. Yet experts say many of those same women are far less prepared than men for their retirement. Retired women have a median income 42 percent lower than men, according to Cindy Hounsell, president of Women's Institute for a Secure Retirement (WISER). Because women live longer than men – three years on average – there are currently six million more 65-plus women than men in the U.S. That means the problem is about to grow exponentially.

A single female has an 82 percent chance
of outliving her financial assets in retirement.

While many Americans have seen their retirement dreams fade in the wake of the recession, experts say the crisis is worse for women.  Women over age 55 earn about 75 percent as much as men, according the Labor Department. They are more likely than men to interrupt their careers to raise children, and they may have started at a lower base. Those factors reduce their contributions to Social Security and ability to save for retirement. And in addition to the likelihood that women will outlive their spouses, divorce is increasing among older Americans. As a result 57 percent of women 65 and older are single, compared with 26 percent of men.  A single female, earning $50,000 a year and not covered by a defined benefit plan, has an 82 percent chance of outliving her financial assets in retirement, according to Americans for a Secure Retirement.

There’s also a new wrinkle: While men disproportionately lost jobs during the recession, women have suffered more during the recovery, perhaps because they are more often employed in state and local government, a sector that continues to shed jobs. Between June, 2009 and May, 2011, men gained 768,000 jobs, while women lost 218,000 jobs, according to a July study from the Pew Research Center.

Like Ingram, women are more likely than men to take responsibility for the care of sick relatives. The percentage of adult children providing personal care or financial assistance to a parent has more than tripled since 1999, according to a 2011 study by MetLife Mature Market Institute. The result: $142,693 in lost wages and lost social security benefits of $131,351. With increased life spans, there are more people living with chronic conditions, "so you have someone who needs care at this point who in the past would not have survived," says John N. Migliaccio, MetLife's director of research. This burden typically falls on women. About 12 percent of all American women are caring for a sick relative, often an ill parent, according to Kaiser’s 2011 Women’s Health Survey.

And as the crisis in state and local budgets continues to worsen and care-giving services are cut, more women are stepping in and provide those services, says Ramsey Alwin, director of the economic security initiative for the National Council on Aging. She's also seeing older women dipping into retirement savings to provide financial assistance to children and grandchildren, due to recent economic hardships where adult children may have faced home foreclosures or lost their jobs.

Consumer advocates are stepping up education efforts, especially those aimed at older women who may have relied on their husbands to handle money. The Center for Financial Security was recently founded by the University of Wisconsin in part because of research showing the likelihood that older women will end up in poverty. “While women today have more economic opportunity than ever before, they also have a great deal more financial responsibility,” said Sandra Timmermann, director of the MetLife Institute. “Compared to previous generations of women who likely had a pension (either theirs or their husband’s) and a deed to a mortgage-free home, today’s women are less prepared.”