Money posed an interesting question today in advance of Mother’s Day weekend...
What's better than flowers for mom? A fatter 401(k).
While you’re not likely to go out and set up a 401K for mom today you should be aware of the inherent and serious challenges our mothers are facing in retirement. NCPSSM’s President/CEO, Max Richtman, describes it this way:
“Women earn less than men even when doing the same jobs, they more often work part-time or in jobs that do not offer retirement savings plans, and they tend to spend more time out of the workforce as a consequence of their caregiving responsibilities. Women could lose $430,480 in earnings over the course of a 40-year career due to the wage gap alone. For Latinas the career losses mount to $1,007,080, and for African American women the losses are $877,480. Lower career earnings also translate to fewer savings for many women in retirement. At the same time, their longer lifespan and higher chances of disability means that they will have higher retirement costs, both for everyday expenses and necessary medical care.”
Is it any surprise that the thought of running out of money in retirement keeps 57% of women awake at night? Finding ways to eliminate this retirement inequity is at the heart of our Eleanor’s Hope initiative. Named in honor of First Lady Eleanor Roosevelt, this campaign raises awareness, recruits and trains new activists and bolsters Congressional leaders who are making a difference on women’s health and retirement security issues. We are also advocating for legislation that addresses the inequities threatening millions of retired women and working to elect lawmakers who share our vision of retirement equity for women.
There are a number of proposals which, if adopted, could significantly level the playing field for women and reduce the threat of poverty in their old age:
Gender Pay Equity. Eliminating the wage gap that limits women’s earnings is essential to helping our daughters and granddaughters save for their own retirement. Congress should strengthen and reform the “Equal Pay Act” by putting an end to pay secrecy, strengthening workers’ ability to challenge discrimination and bringing equal pay law into line with other civil rights laws.
Caregiver Credit. Compute the Social Security benefit by giving an annual caregiver credit for each year of caregiving so that total earnings for the year would equal 50 percent of that year’s average annual wage. Caregiving service years would be those in which an individual provides care to children under the age of six or to elderly or disabled family members. Up to five family service years could be granted to any worker.
Improve Survivor Benefits. Increase the benefit paid to a surviving spouse to an amount that is equal to 75 percent of the total combined benefits that were paid to the couple prior to the spouse’s death, capped at the benefit level of a lifelong average earner.
Consumer Price Index for the Elderly. Adopt the Consumer Price Index for The Elderly (CPI-E) for the purpose of determining the amount of the cost-of living adjustment (COLA) adjustment for Social Security benefits. This is especially important for women who tend to receive benefits longer because they live longer.
By all means, please go ahead and buy those flowers for mom this weekend. Also consider getting involved with our Eleanor’s Hope campaign to ensure generations of American mothers can enjoy a retirement free of worry and poverty.