Reform Needed to Address Lower Retirement Income for Women

There are disparities between retirement income for women and men and women generally have less retirement income than men, largely because of women's lower labor force attachment and lower earnings, on average.

Although it made no recommendations to specific changes to social security and retirement benefit laws, in a report by Government Accountability Office (GAO), “Retirement Security: Women Face Challenges in Ensuring Financial Security in Retirement,’ the GAO provided results of simulations of changes in the law showing the effects on benefits for men and women of different ages, income levels, and marital status. The GAO said, “With such knowledge, policy makers have the potential to mitigate both existing disparities in retirement income as well as the differential effects of reforms.”

Why Change Is Needed

Generally, women have less retirement income than men, largely because of women’s lower labor force attachment and lower earnings, on average, the GAO said. Fewer women than men have income from most major retirement sources, and those women who do receive income from these sources receive less than men. Women’s median Social Security benefit is approximately 70% of the median benefit that men receive. Meanwhile, fewer women than men have pension incomes, and the median value of their pensions is about half that of men’s.

Although only a small proportion of men and women aged 65 and over are engaged in the paid labor force, among those who are, women earn just over half of what men earn. While there is less distinction between the income of men and women from assets such as interest, dividends, rents, and royalties, women earn somewhat less than men from these sources as well.

Older women are more often poor than men. Among those 65 and over, 12% of women are in poverty, compared to 7% of men. Although women’s work outside the home has increased substantially in the last century – with the labor force participation rate of married women aged 16 and over increasing from approximately 32% in 1960 to 61% in 2006 – they spend fewer years in the labor force than men and they more often work part-time. Additionally, they tend to earn less than men during their working years, earning only 77% of what men earned for full-time, year-round work in 2005.

Additionally, certain life events – including changes in marital status, labor force interruptions, and long-term care needs – can significantly reduce the amount of pension income and Social Security benefits for both men and women. However, because of women’s lower earnings and labor force participation, these events may increase the probability women will enter retirement with fewer financial resources than men. Divorce often results in economic loss for both men and women, but women tend to experience more economic loss than men, the GAO pointed out.

Women’s role as primary family caregiver for children and elderly relatives can also reduce their career earnings. For example, one study documented that almost half of women who worked during pregnancy with their first child took unpaid leave and one-quarter quit their jobs.

Because women tend to live longer than men, they are more likely than men to experience widowhood, and in part because of their longer average life spans, women are also more likely than men to become disabled and need long-term care, further increasing demand upon their retirement resources.


The simulations of some proposed changes to the Social Security system and the employer-sponsored pension system resulted in different effects on women and men, and among different subgroups of women, because of differences in lifetime work histories. On one hand, the report said, the model results showed that modifications that compensate for low earnings or time spent out of the workforce for caregiving tend to increase benefits for beneficiaries overall and particularly those in lower income quintiles.

On the other hand, according to the report, the changes that focus on shifts in family structure, such as increases in two-earner couples and increased incidence of divorce, tend to increase the benefits of groups targeted by the change, but produce mixed results for others.

Additionally, some pension rule changes that have been proposed or passed into law in the past several years that take into account changes in the labor force and the changing norms of employer-provided retirement plans are gender-neutral, but may provide important new opportunities for some women to increase their retirement income, the report said (See GAO Simulates Changes to Social Security and Retirement Plan Laws)