Women Face Deep Disadvantages in Retirement

NEW YORK — Women account for a disproportionately large chunk of retired Americans, but shoulder a disproportionate amount of the burdens that older folks carry as they age.

Linda K. Stone, an actuary and a senior fellow at the Women’s Institute for a Secure Retirement (WISER) in Washington, D.C., on Tuesday laid out some stark statistics in a panel discussion at the National Reverse Mortgage Lenders Association’s eastern conference and exposition in New York City. 

Women don’t just earn less because of the enduring pay gap — they also take extended time off to take care of children or other family matters, clocking an average of 12 years out of the labor force. 

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“That’s going to have a big impact on your Social Security income,” Stone said, as Social Security calculates benefits in part on the amount of time one spends in the workforce. 

In addition, women are far more likely to work part-time during their careers in order to juggle childcare, and even those who work full-time might have to decline promotions or positions that require significant travel, potentially restricting access to employer-sponsored retirement plans and hindering their ability to build significant quantities of retirement savings.

And after a lifetime of these structural and social disadvantages, women often find themselves alone in their golden years: There are 6 million more men than women above the age of 65, Stone said, as men generally have shorter life expectancies.

“For most women, widowhood is inevitable,” Stone said, and often for an extended amount of time: 15-year periods of widowhood are not uncommon.

Once the husband is gone, the widow loses his Social Security benefits, and may have to endure health problems alone — often after providing care to their ailing husbands toward the end of their lives. And while many couples plan for a long retirement, Stone pointed out that older married folks tend to only think about their life together as a couple, and not about what might happen when one of them dies.

Faced with these facts, reverse mortgages can be a significant part of women’s retirement planning, according to Lorraine Geraci of Finance of America Reverse. After a presentation touting the benefits of the Home Equity Conversion mortgages over other options, such as a home equity line of credit or sharing housing with other older women, “Golden Girls”-style, Geraci said the key to marketing reverse mortgages to older women is a matter of semantics.

Instead of talking about “long-term care,” she said, use “extended care,” and note that reverse mortgages can allow adult children to provide care for their elderly mothers in the family homestead. To fight the stigma of HECMSs as loans of last resort, talk about how the products can “sustain longevity,” “maintain a lifestyle,” or “increase the wealth” of an older borrower when pitching reverse mortgages — specifically the HECM line of credit — to widows and other potential clients.

“All of us should be selling these like crazy,” Geraci said of the reverse mortgage line of credit.

Stone discussed another “economic shock” for older women: divorce. As RMD reported earlier this month, “gray divorce” is on the rise in America, with split rates among older Americans rising faster than those in any other age group. Divorced women might lose out on their husbands’ retirement plans, though Stone said that access to pensions or other defined benefit plans can often be negotiated as part of the divorce proceedings.

In addition, people who who have been married for more than 10 years can use their ex-spouses’ work histories when determining Social Security benefits, with husbands generally having a more favorable benefit calculation than wives. Stone joked that she often tells women who have been married for nine and a half years but are considering divorce to hold their horses.

“It may be financially better for them to hang in for those last six months,” Stone said.

Written by Alex Spanko

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  • In order to get my children through some financial crises, including their student loans and an albatross farmhouse that I inherited as a “life tenant.” This “gift” needed a great deal of repair, using up virtually all of my retirement savings and also requiring me to take out a mortgage -which has both me and my daughter (the “remainder person) as co-owners. Now I have defaulted private student loans and a couple of judgments against my daughter to deal with. I might have been able to take care of the loans without destroying my application for the HECM (by the way, a process that has taken over a year from application to this final denial), but the judgments against my daughter affect title to the house, even though there are no liens on the house. Now what do I do? I still have substantial work to finish on the house and I can’t access my home equity. In the meantime I have discovered that the big push/seller for HECMs is for the ones that allow people to buy lovely homes in retirement villages with “forward” equity so that they live somewhat cost-free: this is not the reason that HECMs were initiated. They have indeed become another money-making proposition for people who have substantial wealth already.

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