We’ve all heard the old adage, “A mother’s work is never done.” From surviving sleepless nights with a newborn, to navigating the tumultuous teen years, to gently guiding adult children through life’s challenges, a mother’s job is forever.
Another complexity for mothers is safeguarding their family’s financial security while also saving enough for their own retirement so they aren’t a burden on their children. Unfortunately, financial security in retirement is increasingly precarious for most Americans, especially women.
As we celebrate Mother’s Day, here are three things mothers need to know about retirement.
Women face even higher retirement hurdles than men. Many Americans are falling short when it comes to preparing for retirement. About half of households are at risk of not having enough savings to maintain their living standards in retirement. But the situation is worse for women.
We all know women still face a gender pay gap. Eventually, the pay gap becomes a retirement wealth gap. Research by the National Institute on Retirement Security (NIRS) finds that older women receive about 80 percent of the retirement income older men receive, a disparity that indeed mirrors the gender pay gap. More specifically, the median household income for women aged 65 and older in 2016 was $47,244, or 83 percent of median household income for men at $57,144. The NIRS research also finds that caregiving, especially spousal caregiving, has a more detrimental economic impact on women than on men. Additionally, divorce makes retirement more difficult for women, although the timing of divorce seems to matter.
Stay-at-home moms need a retirement strategy. While many mothers juggle their own career and parenting, a significant share of women elect to stay home as family caregivers. About 27 percent of mothers stay home, a share that has remained stable for about a quarter-century. According to the Transamerica Center for Retirement, more than half of stay-at-home moms don’t have a retirement strategy while 75 percent of stay-at-home parents plan to rely on their spouse’s income in retirement.
Clearly, not having a retirement strategy can be risky for mothers. Women typically live longer than men, so they have higher retirement needs. And unexpected life changes like a divorce or a spouse’s death can harm a woman’s financial security and retirement outlook. But there are steps stay at-home moms can take. For example, setting up a Spousal Individual Retirement Account allows a working spouse to contribute to a nonworking spouse’s retirement savings. Yearly, a spouse can contribute up to $5,500 (or $6,500 if over age 50) to a Spousal IRA. Another important action is for stay-at-home moms to understand their Social Security benefits. This can be accomplished by signing up for a free online account at ssa.gov/myaccount to estimate future benefits or manage benefits.
Policymakers can take action to improve retirement outcomes for mothers. There are steps that lawmakers could implement to better meet the retirement needs of mothers. As Congress considers whether and how to expand Social Security, adjusting the spousal benefit and providing caregiving credits in Social Security should be priorities. Also, states could adopt more generous family leave policies to make it less punitive for women to take time out of the labor force to provide caregiving. Both Congress and state legislatures could consider removing age limits on the Earned Income Tax Credit (EITC), so that low-income working people all of ages could receive this income boost. And finally, making permanent the expansion of the Child Tax Credit, which bolsters the household income of families with children, would empower more moms to save for their retirement.
This Mother’s Day, let’s all savor the time together and celebrate the dedication and love of our moms. But let’s also spend time having conversations about the actions we need to take to ensure our moms have a bright future, just as they have done for us.