	The Composition and Work Patterns of American Households and the U.S. Retirement System Have Changed Over Time

Over the last 50 years, the composition of the American household has  changed dramatically. 1). From 1960 to 2010, the percentage of single-parent families  also rose. The decline in marriage and rise in single parenthood over this period  were more pronounced among low-income, less-educated individuals,  and some minorities. 2). Trends in Labor Force Participation

Over the same period, the labor force participation rate of married women  increased (see fig. Since then, the differences in labor force  participation rates for these four groups have narrowed, with labor force  participation among married and single women within 3 percentage points  in 2010. Specifically, over the last two  decades employers have increasingly shifted away from offering their  employees traditional DB to DC plans, and roughly half of U.S. workers  do not participate in any employer-sponsored pension plan. DB plans  typically offer retirement benefits to a retiree in the form of an annuity that  provides a monthly payment for life, including a lifetime annuity to the  surviving spouse, unless the couple chooses otherwise. Trends in Marriage, Work and Pensions May Leave Some Americans Vulnerable

		Social Security Benefits

Taken together, the trends in marriage and workforce participation have  implications for the receipt of Social Security retirement benefits,  especially for women. The decline  in the proportion of women with marriages that qualify them for spousal  benefits—coupled with the rise in the percentage of women receiving  benefits based on their own work record—has resulted in fewer women  today receiving Social Security spousal and survivor benefits than in the  past.been more dramatic. Households with DC plans  have greater responsibility to save and manage their retirement savings  so that they have sufficient income throughout retirement. Single parents, in particular, tend  to have fewer resources available to save for retirement during their  working years and are less likely to participate in DC plans. Lastly, the transition from DB to DC plans has increased the vulnerability  of some spouses due to differences in the federal requirements for  spousal protections between these two types of retirement plans. Despite the role Social Security has played in reducing  poverty among seniors, poverty remains high among certain groups (see  fig. These groups include older women, especially those who are  unmarried or over age 80, and nonwhites. Prior GAO work has shown that long- term unemployment can reduce an older worker’s future retirement  income in numerous ways, including reducing the number of years the  worker can accumulate savings, prompting workers to claim Social  Security retirement benefits before they reach their full retirement age,   Similarly, our  and leading workers to draw down their retirement assets.past work has shown that divorce and widowhood in the years leading up  to and during retirement have detrimental effects on an individual’s assets  and income, and that these effects were more pronounced for women. As a result of the trends described above, these vulnerable populations  may face increasing income insecurity in old age and be in greater need  of assistance. L. No. Concluding Observations

Our findings underscore how retirement security can be affected by  changing circumstances in the American household and the economy.
Why GAO Did This Study

Over the past 50 years, poverty rates among older Americans have declined dramatically, in large part due to the availability and expansion of Social Security benefits. Social Security is now the most common type of income for retirees. Social Security retirement benefits are available not only to those who qualify based on their own work history, but also to spouses, widows/widowers, and in some cases former spouses of workers who qualify. However, in recent decades, marriage has become less common, women have entered the workforce in greater numbers, and many employers have shifted from offering DB to DC plans.
In light of these trends, GAO is reporting on: (1) the trends in marriage and labor force participation in the American household and in the U.S. retirement system, (2) the effect of those trends on the receipt of retirement benefits and savings, and (3) the implications for vulnerable elderly populations and current challenges in assisting them. This statement draws from previously issued GAO work and a recently issued report, which was based on an analysis of nationally representative survey data including the Survey of Consumer Finances, the Survey of Income and Program Participation, and the Current Population Survey (CPS); and a broad literature review. GAO also interviewed agency officials and a range of experts in the area of retirement security.
GAO is making no recommendations.

What GAO Found

The decline in marriage, rise in women's labor force participation, and transition away from defined benefit (DB) plans to defined contribution (DC) plans have resulted in changes in the types of retirement benefits households receive and increased vulnerabilities for some. Since the 1960s, the percentage of unmarried and single-parent families has risen dramatically, especially among low-income, less-educated individuals, and some minorities. At the same time, the percentage of married women entering the labor force has increased. The decline in marriage and rise in women's labor force participation have affected the types of Social Security benefits households receive, with fewer women receiving spousal benefits today than in the past. In addition, the shift away from DB to DC plans has increased financial vulnerabilities for some due to the fact that DC plans typically offer fewer spousal protections. DC plans also place greater responsibility on households to make decisions and manage their pension and financial assets so they have income throughout retirement. As shown in the figure below, despite Social Security's role in reducing poverty among seniors, poverty remains high among certain groups of seniors, such as minorities and unmarried women. These vulnerable populations are more likely to be adversely affected by these trends and may need assistance in old age.
Note: The category “White” refers to people who are white only, non-Hispanic. “Black” refers to people who are black only, non-Hispanic. “Asian” refers to people who are either Asian only, Pacific Islander only or Asian and Pacific Islander, and are non-Hispanic. Hispanic people may be any race. Percentage estimates for poverty rates have margins of error ranging from 0.6 to 8.6 percentage points. See the hearing statement for more information on confidence levels and the data.