1.) A variety of proposals seeking to encourage more  individuals to save have been introduced in the past several years. Women Have Less Retirement Income than Men Largely because of Differences in Labor Force Participation and Lifetime Earnings

Generally, women have less retirement income than men, largely because,  on average, women have lower labor force attachment and lower earnings  than men. While about 90 percent of men and women aged 65 and older  receive Social Security benefits, fewer women than men have income from  most other major sources of retirement income, and they receive less  than men from those sources, according to a Congressional Research  Service analysis of Census Bureau data. Women also tend to earn less than men during  their working years. The difference between men’s and women’s pension income is larger than  for Social Security. Additionally, rates of poverty among those 65 and over are higher for  women than for men. Women Have More Intermittent Work Histories and Lower Earnings than Men

Women’s labor force participation increased substantially in the latter half  of the 20th century, although women continue to work fewer total years  than men and more often work part-time. Although women’s earnings  have risen relative to men’s over time, women nevertheless continue to  earn less than men. In fact,  in prior work we found that work patterns are a key factor in explaining  the differences in men’s and women’s earnings. However, even after  accounting for these and other behavioral factors—such as educational  attainment—unexplained differences remained. Certain Life Events May Reduce Women’s Retirement Resources More Than Men’s

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. In addition, women are most often the family members who  provide unpaid care, which can reduce their career earnings as well. In retirement, divorce has the potential to reduce Social Security benefits  because Social Security’s eligibility rules require that the marriage last at  least 10 years for a divorced spouse to claim benefits from an ex-spouse’s  earnings record. Specific Changes to Social Security and Employer-Sponsored Pensions Will Affect Women Differently than Men Because of Differences in Lifetime Work Histories

The specific changes to Social Security and pensions that we modeled had  different effects on women and men, and among different subgroups of  women, because of differences in lifetime work histories. On one hand, our 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, our results showed that modifications that focus on  changes in family structure, such as more two-earner couples and an  increased incidence of divorce, tend to increase the benefits of groups  targeted by the change, but produce mixed results for others. A number of  pension modifications proposed in the last several years take into account  changes in the labor force and the changing norms of employer-provided  retirement plans; while these reforms are gender-neutral, they may provide  important new opportunities for women to increase their retirement  income. This  assumes that those affected would not make any changes in their savings  or spending behavior to offset the requirement. Consequently, despite elements of the Social Security  and employer-sponsored pension systems that provide retirement income  for low- or non-earning spouses, the remaining gaps between women’s and  men’s labor force participation, earnings, and pension participation will  continue to leave many women with fewer financial resources in  retirement than men. Agency Comments

We provided a draft of this report to the departments of Labor and the  Treasury, the Internal Revenue Service, and the Social Security  Administration. 2. 3.
Why GAO Did This Study

Women aged 65 and over will account for a growing segment of the U.S. population over the next several decades. Despite increases in women's workforce behavior in the past 65 years, elderly women have persistently high rates of poverty. Thus, it is important to understand the differences between men's and women's retirement income, and how women may fare given future reforms to Social Security and pensions. GAO was asked to examine (1) how women's retirement income compares with men's and the reasons for differences; (2) how certain life events such as divorce, widowhood, and workforce interruptions affect women's retirement income; and (3) the possible effect on women's retirement income of certain changes to Social Security and pensions that seek to mitigate the effects of differences in workforce participation patterns. To address these objectives, GAO reviewed the relevant literature, interviewed academics and other retirement experts, and used a microsimulation model to project future retirement income. GAO provided a draft of this report to the departments of Labor and Treasury, the Internal Revenue Service, and the Social Security Administration. Cognizant agency officials provided technical comments which were incorporated as appropriate. GAO is making no recommendations.

What GAO Found

In general, women have less retirement income than men, largely because of women's lower labor force attachment and lower earnings, on average. Fewer women than men have income from most major retirement sources, and women have less income from these sources. Women's median Social Security income is 70 percent of men's. Also, fewer women than men have pensions. Among the population age 65 and over who continue to work, women earn just over half of what men earn. Women also have somewhat smaller income than men from assets, such as interest and dividends. Accordingly, rates of poverty among those 65 and over are substantially higher for women than for men. Although their participation has increased substantially in the last century, women still spend fewer years in the labor force than men, and they more often work part-time. Also, women tend to earn less than men, despite increases in their wages over time relative to men. Although work patterns are key in earnings differences, in prior work, we found that even after accounting for behavioral differences such as education or labor force participation, women still earn less than men. 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 women receive--and leave women with fewer financial resources at retirement than men. Social Security divorced spousal benefits are available only if the marriage lasted at least 10 years. Furthermore, pension benefits are available to a divorced spouse only under certain circumstances. Women's role as primary family caregiver for children and elderly relatives can reduce their career earnings, on which retirement income is based. Because women tend to live longer than men, widowhood and costly long-term care assistance may further reduce their retirement resources. GAO's simulations of some Social Security changes that would compensate for low earnings or time out of the workforce showed that those changes tend to increase benefits for beneficiaries overall, and particularly those in lower income quintiles. Alternatively, 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. Some pension changes that have been proposed in the past several years take into account the changing labor force and norms of employer-provided retirement plans; while these changes are gender-neutral, they may provide important new opportunities for women to increase their retirement income. For example, decreased vesting requirements may provide additional pension income to those with intermittent workforce participation who would not qualify for pension benefits under a longer vesting schedule.