On March 15, the Senate Special Aging Committee held a hearing entitled, “Bridging the Gender Gap: Eliminating Retirement Income Disparity for Women.”
In his opening remarks, Chair Gordon Smith (R-OR) said that “preparing for retirement and achieving financial security are daunting tasks for all Americans to be sure; however, women face many unique challenges.” He explained that women take more time off work to care for their children or elderly parents, are more likely to work part-time jobs, and generally earn less than men, adding, “All of these factors have a significant impact on what women receive from Social Security and pensions, as well as what they are able [to] accumulate through personal savings. The bottom line is it’s harder to accumulate retirement income when you’re making less money and working fewer years.” Sen. Smith highlighted his bill (S. 1359) to increase retirement savings for all Americans and said that he is working to craft legislation “with the specific goal of narrowing the retirement income gap between men and women.”
Ranking Member Herb Kohl (D-WI) explained that “retirement security is often thought of as a ‘three-legged stool’ Social Security, employer pensions, and private saving. But it’s clear that for too many women facing retirement, the stool is shaky. We must strengthen all three legs, and also promote a fourth leg the opportunity to continue working past traditional retirement age for those who need to do so.” Echoing the difficulties women face, he announced his introduction of a bill (S. 1826) that would “address these barriers and expand the time older workers have to work, save, and secure a more comfortable retirement. The bill would provide tax incentives for businesses to hire and retain older workers, offer them part-time and flextime opportunities, and include them in the company’s pension and health insurance plans. It also seeks to ease the burden on caregivers…by giving a tax credit to workers for the care of their senior family members.”
Former Rep. Barbara Kennelly (D-CT), president and CEO of the National Committee to Preserve Social Security and Medicare, stressed the importance of Social Security, stating that it “is the only source of retirement income for 29% of unmarried elderly women. Those women who have other income are still highly dependent on Social Security. For unmarried women over age 65, Social Security comprises 52% of their total income, compared with 38% for unmarried elderly men, and 35% for elderly couples. Were it not for Social Security, more than two-thirds of elderly women would live in poverty.” She expressed her opposition to a proposal that would raise the retirement age as a way to address the solvency of Social Security, explaining that many seniors leave the workforce because of poor health, downsizing, or they are offered incentives for early retirement. “My point is that keeping older workers employed is not as simple as raising the retirement age. Much work must be done to educate employers on the value of an older workforce. And incentives must be provided to help alleviate the costs of retaining longer tenured workers. On the employee side, we must identify and remove disincentives to continued work that exist today.”
Women’s Institute for a Secure Retirement (WISER) President Cindy Hounsell pointed out that women in the workforce are not as prepared for retirement as their male counterparts: “Only 53 percent of women employees participate in an employer-sponsored pension plan. Aside from lower earnings, which means less access to plans, women are twice as likely to work part-time, and part-time workers are less likely to have retirement plans or they work at jobs that do not offer retirement plans. That said, if a woman does work for an employer with a tax deferred savings plan such as a 401(k) or 403(b) she is less likely than a man to contribute to it, largely because she earns less.” Ms. Hounsell urged Congress to encourage automatic enrollment and “pro-saving defaults” in defined contribution plans, expand the saver’s tax credit, promote incentives for older workers to continue employment, and promote financial education and retirement planning. She also said that women should make retirement a priority, learn as much as they can about their employment benefits, educate themselves about their longevity risks, estimate their retirement needs and the impact of inflation, and save more and work longer if possible. Finally, Ms. Hounsell highlighted WISER’s National Women’s Resource Center and Program on Women’s Education for Retirement: “The Center’s primary goal is to educate the most women we can possibly reach with information that can assist in retirement planning, and provide average and low-income women with the opportunity to take the first step toward controlling their financial futures. We have directly reached more than 25,000 women through our workshops and outreach with our publications.”
The committee also heard testimony from Karyne Jones, President and CEO of the National Caucus and Center on Black Aged, Inc. Stressing the importance of retirement planning for minority women, she said that “for those working today, 38 percent of Black women, 26 percent of Hispanic women, and 38 percent of Asian/Pacific Islander women are covered by a pension plan.” Ms. Jones noted that younger minority women still have the opportunity to save for a secure retirement, but added, “The harsh reality remains that, as long as most minority women earn less money than other women and men, and have fewer opportunities to save, they will have less retirement income and face the highest risks of poverty in old age.” She encouraged the committee to support proposals that would promote pension coverage for low-wage and part-time workers, increase Social Security survivor benefits, make pension division after divorce more equitable for women, and provide a tax credit for caregivers.
