Academic journal article Risk Management and Insurance Review

Women and Pensions

Academic journal article Risk Management and Insurance Review

Women and Pensions

Article excerpt

Moderator: Vickie Bajtelsmit

Speakers: Anna M. Rapport, M. Cindy Hounsell, Madeliene d'Ambrosio, Glenn W. Merrick, and Katie Kaufmanis

This article features a panel discussion on Women and Pensions organized by Vickie Bajtelsmit for the American Risk and Insurance 2003 Annual Meeting. The moderator, Vickie Bajtelsmit, is Professor of Finance at the College of Business, Colorado State University. The first panelist is Anna Rappaport, an actuary and consultant for Mercer Human Resources Consulting. She has authored numerous articles relating to women's issues over many years. The second panelist is Cindy Hounsell, the Executive Director of WISER, the Women's Institute for a secure Retirement. Madeleine d'Ambrosio, Vice President and Executive Director of the TIAA-CREF Institute, is the next panelist. These panelists represent consulting, public policy, and private sector pension perspectives. The other panelists are Glenn Merrick, a divorce attorney, who will give his views about the financial impact of divorce, an important issue affecting women. Katie Kaufman is the final panelist; she is the Director of Communications for the Colorado Public Employee Retirement System. Anna Rappaport begins the discussion by providing an overview of some factual information as background for the interactive panel discussion.

Anna Rappaport: When we think about financial security, we think about individuals and families, men and women. But whenever we start thinking about retirement, we immediately think of the older population. Figure 1 depicts the marital status, by race and sex, of the U.S. population in 2000. The four columns show the number of males and females aged 65-74 and the number of males and females aged 75 or older. The first observation is that there are more women in both age groups, because women live longer than men. Note that the difference is bigger in the 75 plus age group. However, when we look at marital status, we see that more men than women are married in both age groups. This occurs because men marry younger wives, and when they lose their wives, they tend to remarry. Women, on the other hand, tend to stay widowed. As a result, the majority of women in the age 75 and over category is widowed; and they have special, difficult issues. This is an important point because if a couple is planning, it is likely that the woman will survive her spouse and live alone during her last years. It is not unusual to see periods of widowhood of ten to fifteen years or more. There are also mature divorced women. So planning should consider a range of possible future circumstances and not just the current situation. In the remainder of this talk, I will discuss women and financial services, women and Social security, and some other policy issues. But first, let us review some special issues affecting women.

Specifically, women are still paid less than men. They spend fewer years in the paid labor force, and on average live longer and tend to marry older men. They receive lower benefits from Social security and private pensions, on average, not because the systems work differently, but because they have different labor force histories. Disability coverage (whether public or private) is not available to homemakers. Married couples have more financial security than unmarried people. Married women, as already mentioned, are likely to end life in widowhood, and older women are much less likely to have a family caregiver when they need it. As a result, they're much more likely to end up in an institution requiring payment for care.

The Social security Administration reports that for 1998, median earnings of full time, full-year workers was $35,000 for men and $26,000 for women.1 Years of covered employment for retired worker beneficiaries, aged 62 in 1998, were 38 for men versus 29 for women. This indicates that women are not spending as much time in the workforce. Women at age 65 in 2000 had a life expectancy of 19 years versus 16 for men; and this trend is likely to continue although the gap might lessen. …

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