Poverty in Retirement a Harsher Reality for Women Than Men

A new report finds that women have substantially less income in retirement than men.

Women are far more likely than men to face financial hardship in retirement, according to a new report from the National Institute on Retirement Security (NIRS) titled, “Shortchanged in Retirement: Continuing Challenges to Women’s Financial Future.”

Women age 65 and older have an average income that is 25% lower than men’s. By age 80, women’s income is 44% lower. In addition, women face higher medical expenses and are more likely to need more expensive long-term care. Consequently, women are 80% more likely than men to be impoverished at age 65 or older, while women age 75 to 79 are three times more likely to fall below the poverty level than men.

As to what percentage of female and male senior citizens are impoverished, in the 65-69 age group, it is 6% of men and 8% of women, according to NIRS. In the 70-74 age group, it is 5% of men and 8% of women. In the 75-79 age group, it is 4% of men and 12% of women, and among those 80 and older, it is 6% of men and 11% of women.

“It is well documented that the nation faces a retirement savings crisis, but the pain is particularly severe for women because we need a bigger retirement nest egg than men, thanks to our longer life expectancy,” says Diane Oakley, NIRS executive director and co-author of the report. “This new data is troubling. It shows that a woman’s nest egg is substantially smaller than a man’s and that we’re not making real headway toward closing the retirement gender gap.”

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In 2010, men received an average retirement income of $17,856 from a pension, while women received $12,000, or 33% less. In 2014, according to Vanguard, the average amount that men had saved in a 401(k) was $36,875, compared to $24,446 for women, or 34% less. These gaps, NIRS says, are primarily due to the fact that in 2014, women earned an average of $0.79 for every dollar earned by a man.

NEXT: Women working longer to cover shortfall

The report also finds that the percentage of women between the ages of 55 and 64 in the workforce climbed from 53% in 2000 to 59% in 2015, which suggests, NIRS says, “women may be working longer in order to make up for lower retirement savings over their careers and to offset investment losses from the Great Recession.”

Women are also more likely than men to work part-time and to have shorter job tenure, making it more difficult for them to meet employers’ retirement plan eligibility requirements, according to NIRS.

Women who are widowed, divorced or over age 70 rely on Social Security benefits for a majority of their income, NIRS says. However, those who work in health care, education and public administration fields have higher incomes in retirement due to pension plans being prevalent in these industries.

NIRS recommends that women save more. The organization is also calling on policymakers to strengthen Social Security benefits for women and increase defined contribution plan eligibility for part-time workers.

The report is based on an analysis of the 2012 Survey of Income and Program Participation data from the United States Census. “Shortchanged in Retirement” can be downloaded here.

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