NCPA - National Center for Policy Analysis

Women and Retirement

March 4, 2002

Because women are more likely to be alone in retirement, they are more likely to live in poverty, says Vickie Bajtelsmit, an associate professor at Colorado State University. In fact, elderly women are twice as likely as elderly men to live below the poverty level.

That's why women, even more than men, need a retirement system consistent with the way they participate in the economy, according to a study by Bajtelsmit from the National Center for Policy Analysis (NCPA).

According to the study:

  • Women are more likely to work part-time and for minimum wage. They are more likely to drop out of the work force for periods of time to care for family members.
  • These activities cause women to lose benefits under traditional employer-sponsored, defined-benefit retirement programs.
  • Defined contribution plans, like 401(k)s, give women the flexibility to change jobs and retain savings, but most often women invest too conservatively to build sufficient retirement funds.

"For example, a woman who drops out of the labor market for as few as five years," Bajtelsmit said, "can end up with as much as 30 percent less in her defined contribution retirement program." Although some progress has been made, more needs to be done, Bajtelsmit added:

  • Increase allowable contributions to IRAs and encourage broader employer pension sponsorship.
  • Increase employment retirement program coverage for part-time workers.
  • Provide maximum portability for retirement savings.

"Current public policy unintentionally discriminates against women, and its impact is severe," Bajtelsmit said. "Seventy-three percent of elderly poor are women and 14 percent of elderly women live in poverty."

This study will be released today as part of the NCPA's Women's Agenda Conference in Washington, D.C.

Source: Vickie L. Bajtelsmit, "Women as Retirees," Women in the Economy Chapter, February 2002, NCPA.


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