For millions of aging Americans, it starts by examining the 401(k) statement. Their retirement savings plan has gone nowhere for more than a decade. Their mood darkens when they think about their debts (too many) and their savings (too little). The harsh recession has taken a toll on households headed by people aged 55 to 64, who have seen their wealth—net equity in homes and financial assets combined—fall 13.7 percent, to an average $222,300, since the recession hit. “We’re in a mess when it comes to retirement,” says Steven Sass, program director of the Financial Security Project at the Center for Retirement Research at Boston College.
His comment seems especially true for women. They earned less than men throughout their work lives, and they were more likely to take a break to raise children. The wage penalty shows up in an average retirement income for women 65 and older in 2009 that was 57 percent less than for men of the same age group—$21,519 vs. $37,509, according to the MetLife Study of Women, Retirement, & the Extra-Long Life. Women face the prospect of paying bills much longer than men, since those reaching age 60 have an average remaining life expectancy of 23.8 years vs. 20.6 years for men. Millions of women have labored in low-wage service jobs without pensions. In 2010, three out of five women expressed “a lot” or “a fair amount” of worry about not having enough to live on in retirement, according to a survey by the Institute for Women’s Policy Research.
Nevertheless, it’s underappreciated how much better one large cohort of aging boomers should do financially during the traditional retirement years: The college-educated stalwarts of the feminist movement. A generation of well-educated career women is nearing retirement for the first time. It’s the group that marked the revolutionary shift from earning money because they and their families needed it to embracing working because it defined “one’s fundamental identity and societal worth,” said Claudia Goldin, economic historian at Harvard University, in her 2006 Richard T. Ely lecture at the American Economics Assn. annual meeting. “It involved a change from ‘jobs’ to ‘careers.’” They’re poised to flourish in their elder years, at least compared with most everyone else.
PERSISTENT BUT NARROWER GAP
It’s an accomplished generation with plenty of financial and human capital. Although the earnings gap between college-educated men and their female counterparts remains, it has narrowed. Since 1979, earnings for women with college degrees rose 33 percent, while those of their male peers increased 22 percent. Women make up 51.5 percent of all management, professional, and related positions, somewhat higher than women’s share of total employment, which is 47 percent. Among full-time, full-year workers, a higher percentage of women than men have participated in employer-sponsored retirement plans since 2001, according to the Employee Benefits Research Institute. In 2010, it was 55.5 percent for women and 53.8 percent for men. For women earning $75,000 or more, 72.5 percent were in a retirement plan (69.8 percent for men), and for those with a paycheck between $50,000 and $75,000, it was 70 percent (64.1 percent for men).
Financial stereotypes about women and money are remarkably durable. All one needs to do is peruse the personal finance section of a bookstore, and you’ll see a number of patronizing titles, such as Shoo, Jimmy Choo!: The Modern Girl’s Guide to Spending Less and Saving More and Does This Make My Assets Look Fat?: A Woman’s Guide to Finding Financial Empowerment and Success. The research suggests otherwise, however. For example, a University of Michigan Retirement Research Center study found that men trade 56 percent more than their female counterparts in 401(k) plans, and the more men traded, the worse they did.
The vanguard generation of the women’s movement is well-suited to work long into the traditional retirement years. Baby boomers are healthier and better educated than earlier generations. Survey after survey shows that they don’t think of themselves as old and they’re well-positioned to earn a paycheck. Moreover, a part-time job and flexible work schedule allow savings to compound longer and make it practical to delay taking Social Security, a boost to the annual benefit. Certainly, the trend is toward a longer work life. Between 1993 and 2009, for instance, the labor force participation rate of women ages 65 to 69 who had completed four or more years of college rose 77 percent, the Urban Institute calculated.
A SEARCH FOR MEANINGFUL WORK
Of course, many aging boomers might want to say goodbye to their current employer and try something new. There’s no question the current job market is harsh on all job seekers, young and old. Nevertheless, for college-educated women, the insights gained from a lifetime of work and family flexibility, moving in and out of the workforce, shifting from full time to part time and back again, will hold them in good stead when looking for work. “They’re looking for what will be satisfying in the next stage of life,” says Betsy Werley, head of Transitions Network, a nonprofit that acts as a career resource for professional women 50 and older. “They’re saying, I want to work, but in a different way.”
Take the experience of Pat Snyder of Columbus, Ohio. She’s 64 and like everyone else her age she’ll be eligible for Medicare next year. But she’ll also receive a master’s degree in applied positive psychology from the University of Pennsylvania in 2012. The degree is geared toward boosting her credentials for her third career, which she launched in 2010: coaching lawyers seeking a career change or greater fulfillment in their current profession. She was a lawyer for some two decades previously. Before that, she was a newspaper reporter. “It’s a practical third career for me, it’s flexible, and it’s fun,” Snyder says. “A lot of women are looking for meaningful work at this stage of their lives.”
The women’s movement is probably the most powerful social movement of the post-World War II era. The generation that swayed to singer Helen Reddy’s anthem, “I am woman, hear me roar,” transformed the U.S. education system and the workplace. It’s heartening to think that at least this one group has devised a means to a successful retirement—a path all of us can learn from.