A group of retirees was asked, in a Time magazine survey, what makes them stay awake at night — fear of death or fear of outliving their savings. A whopping two-thirds chose running out of money.
Very few companies today offer its workers a decent pension, if anything at all. That leaves them having to rely on Social Security along with whatever they’ve managed to squirrel away in their 401K or whatever.
A much-touted rule of thumb predicts the need for 70% to 80% of one's preretirement income to maintain one's present standard of living. With the average savings account balance at $4,500 and the median retirement account at $60,000, retirees have good reason to be tossing and turning at night.
As troubling as this sounds for both men and women, it’s a far more dire situation for female retirees.
The disparity between equal work for equal pay between genders is an established unfair practice. Less discussed, but equally important, is that this disparity continues and amplifies itself into retirement.
Last weekend, I was pulling out of a big box store when I noticed a nicely attired woman in her late 70s holding a sign. It read, “Anything will Help. God Bless.” I pulled over and approached her.
We got to talking and she told me her name was Edith and that she had worked all her life as a cashier, had never married, and had lived and tended to her mother up until her Mom’s passing. She had no savings to speak of and had managed to scrape by on her monthly SSI check until her rent increased. Try as she may, she could no longer make ends meet. I asked Edith if I could buy the groceries she needed for the week. She smiled bittersweetly, insisted on contributing the $6 she had already collected, and then graciously accepted my offer.
Edith’s situation is not unique. A 2016 study by The National Institute on Retirement Security entitled “Shortchanged in Retirement” reports that, “Women have an 80% more likelihood than men to be impoverished at age 65 and older.”
The study concludes that the major reasons for this disparity is a tottering “three-legged stool” that is described as inadequate Social Security benefits, nonexistent or at best substandard pensions, and insufficient personal retirement savings.
The result is financial insolvency.
It doesn’t take a rocket scientist to figure out the causes.
First, women live longer than men, about five years, hence they need more savings to tide them over.
Second, according to the 2016 census women have been paid around 80% of what men have earned doing the same job.
Third, women are traditionally the ones to stop working or elect to work part time in order to care for their children, their parents, and their spouse.
These three contributing factors results in a significant reduction in their savings, their pensions, and their monthly social security allotment.
Their “three-legged stool” can at best be characterized as wobbly and shaking; and at worst as on the verge of collapse.
Various experts in the field have suggested a number of legislative reforms to help alleviate it, some of which are:
• Revamping federal policies to include pension coverage for part time work.
• Allowing workers who take time off under the Family and Medical Leave act to count that
time toward meeting vesting and service requirements.
• Having employers sponsoring 401(k) to allow part time employees to participate in the plan.
• Providing a bump up in SSI benefits at age 80 to keep up with increases in the cost of living.
• Improving Social Security survivor benefits and providing credits for caregivers.
We are one of the richest nations on the planet. To subject some our senior citizens to having to depend on the kindness of strangers to make ends meet is outrageous. It is high time that we revamp how we care for our retirees so that they enjoy their golden years feeling secure, appreciated and dignified. How we treat the less fortunate is a reflection of who we are.
We need to put our best step forward and correct this inequality moving FULL SPEED AHEAD.
Allan Goldstein is a retirement coach and Long Beach resident.