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  • 401(k)s Mean Women Over 65 More Likely To Live In Poverty
    Posted On: Apr 20, 2016

    By JoAnne Powers, April 21, 2016

    Recent data from the Washington, D.C.-based Economic Policy Institute shows that while, by some measures, men and women are now equal in terms of participating in 401(k)s, or participating in retirement plans in general, this does not mean that women are catching up to men.   EPI Economist Monique Morrisey:

    [Monique Morrisey]: “What’s happened, really, is that single men have seen their retirement security declining sharply.  So single men and single women are both doing really badly, and in the case of single men, their situation has been deteriorating rapidly.  The other reason it’s not good news for women that they’re now equal with men, by and large, by these retirement measures is that women actually have lower lifetime earnings and they live longer, so the amount of money they get in retirement is still going to be a lot lower, and it won’t last as long, or it won’t last them until they die, even more so than with men.  So they live about two-and-a-half years longer, they need that much more savings in a retirement plan, and they don’t have it.  That’s a situation where it appears that women are doing okay, but they’re not.  In fact, the poverty rate for women, and especially older women, and especially older minority women or less educated women, is very high.  For some groups of women it’s 30 percent or more women are actually living below poverty in retirement.”

    The retirement system used to be a major factor in combatting inequality for older and minority women, but not so much anymore.  Women over 65 are far more likely to live in poverty than their male counterparts regardless of race, educational background, and marital status:

    [Monique Morrisey]: “Women seem to be catching up, but I don’t think that that’s really a reflection of genuine equality in terms of retirement.  And, other groups, they’re not only not catching up, but the gap is widening…and there’s no reason for that.  I mean, we understand that income equality is there, but there’s no reason why the retirement system, which used to be kind of an equalizer, is now starting to magnify inequality.”

    It’s been 25 years since participation in 401(k) plans exceeded that in traditional pensions, but the amounts retirees get from traditional pensions is about six times more than they’re getting from 401(k)s or IRAs.   Morrisey stressed that pensions still matter a lot, particularly to women, people of color and workers with high-school educations.

    [Monique Morrisey]: “When it comes to public sector pensions, women and African-Americans rely on these pensions as a share of their income a lot more than other groups, so the recent attacks on public-sector workers, on public sector pensions, have been especially damaging for women and African Americans.”

    Morrisey observed that the inequality problems growing elsewhere in our retirement system don’t seem to apply to Social Security:

    [Monique Morrisey]: “The other thing that the charts show is that Social Security is an equalizer, has always been that way, and is more important to most Americans than ever.  Unfortunately, we’re also cut it back, but I think that that’s…one of the big lessons of this is how much we need social security and we should be expanding it rather than talking about shrinking it.”


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