While U.S. women are now more likely to be covered by employer-offered retirement plans than men, they continue to end up with less retirement income and face a greater risk of living in poverty than elderly men, according to a new report from the Government Accountability Office (GAO).
Why? According to the GAO, it's mainly because women tend to have lower lifetime earnings than men, take more time away of the workforce to care for family members, and outlive their spouses. And, oh by the way, the recession and its bite on pension plans in general isn't helping, either.
Also See: Why Women Still Make Less than Men
According to its report to the U.S. Senate's special committee on aging, Retirement Security: Women Still Face Challenges, the GAO notes that from 1998 to 2009, women surpassed men in their likelihood of working for an employer that offered a pension plan, as the proportion of men covered by plans declined.
However, reported the GAO, women depended on Social Security for a larger percentage of their retirement income than men. For example, in 2010, only 12% of men over age 65 depended solely on Social Security for their income, compared to 16% of women over age 65. In addition, the percentage of household income women received as a result of their lifetime earnings, while increasing, remained consistently lower than for men. In addition, the poverty rate for women age 65 and over was nearly twice that of men in 2010.
The GAO also found that major life changes have a more pronounced detrimental effect on women's retirement income than on men. For example, divorce reduced women's household income by 41%, compared to 22% for men. The death of a spouse reduced women's income by 37%, compared to 22% for men, an especially telling difference considering that women consistently continue to outlive their spouses on average.
What the GAO Recommended: While the GAO made no specific recommendations, it did note that there are a few things the federal government could consider doing to help women facing income insecurity in retirement. Of course, warns the GAO, "All of these options have advantages and disadvantages that would need to be evaluated prior to implementation."
For example, existing tax incentives intended to help working people save for retirement could be increased. But one person's tax incentive is everyone else's tax increase. The government could also increase Social Security benefits for widows. However, that would only increase the cost of the Social Security program, thus making its long term survival even less likely than it is today, which is not very.
Also See: Where to Bridge the Gender Pay Gap