Jonathan P. Baird

Here is a new context for the use of the phrase “ticking time bomb.” The context is retirement and the utter lack of preparation we have devised as a society for a fast-approaching demographic explosion.
The basics of the retirement crisis are easy to grasp. As the boomer wave starts aging into retirement, the senior population is on the verge of big-time expansion. We will have more people living longer with lower income and fewer savings. These same people will face high housing costs and, living longer, will often experience higher health care costs whether they are insured or not.
Leaving aside the current recession and its consequences, it is entirely fair to say that the safety net, particularly Medicaid, is not prepared for this sizable demographic shift.
At particular risk are women because they live longer and are more likely to be single. They represent the majority of those who will be financially insecure during their retirement years. A significant percentage will run out of money during retirement.
New Hampshire is fortunate that an in-depth study of the retirement crisis titled “Retirement Insecurity” has just been released by the New Hampshire Women’s Policy Institute. The authors are Peter Antal, Katie Merrow and Peter Francese. The report, supported by the nonprofit Women’s Institute for a Secure Retirement (WISER), is the first comprehensive look at the financial status of
women age 65 and over in our state.
The findings of the report are sobering.
Sixty two percent of older women living alone have income below what is needed to cover the basic cost of living. As of 2007, the report found 28,000 New Hampshire women age 65 and over who had income below what is minimally needed to survive. The report predicts that by 2020, if income distribution remains the same, that number will rise to 49,000.
The report identifies four main reasons why women are particularly challenged in preparing for retirement.
First, women have lower lifetime earnings than men. There are multiple factors behind this finding including differences in wages, occupational concentrations, labor force participation in full-time and part-time work and women’s primary role in family care-giving. The report estimated the lifetime cost of care-giving is $659,139.
Second, women are less likely than men to have retirement plans. Women living alone rely more heavily on Social Security benefits. Yet the average Social Security benefit for a woman over age 65 is only about $800 a month, according to WISER.
Third, women tend to live longer than men. National data put women’s average life expectancy at 80.1 years, men’s at 74.8 years. Just the fact of living longer means that there is a need for more savings to last through later years.
That does not even consider the additional health care costs of older age. Approximately one-quarter of women over 65 rate their health as fair or poor.
Finally, women tend to have lower financial literacy than men. The report mentions that even women with substantial assets may not be secure if they lack the financial education to manage their resources. Lack of financial literacy particularly matters because women are increasingly likely to live alone as they age.
Some might say the simple answer is for women to work longer. But WISER points out several reasons why this isn’t a workable solution for many women: a lack of jobs, poor health, or providing care for a spouse, a mother, or mother-in-law. The grim economy could stay this way for months or even years. Jobs will likely be harder to come by for older workers.
The Women’s Policy Institute report does not stop at identifying the problem. It suggests practical programs at the state level that could increase retirement savings.
New Hampshire could set up a state-sponsored voluntary retirement savings plan. Such plans do not entail state funding of contributions. They would simply provide a vehicle for individual savings similar to the “529” education plans. They could be targeted to low- and moderate-income workers.
The report also proposes targeted educational seminars on retirement savings, the development of local ordinances that would allow more older women to live with family and education for adult learners to increase opportunity for higher wages.
Retirement is an issue that cuts deep. It is a public service to raise the profile of retirement planning as a critical policy issue. In a bad economy, temptation exists to think about only the immediate future. Doing that would wrongly indulge our societal blind spot. Retirement is an issue for everyone.