50 Years of Financial Progress for Women

As the lower-paid sex, women have no shortage of insecurities about their retirement finances.

Only one in five working women feels “very confident” of being able to retire comfortably, the Transamerica Center for Retirement Studies reports in its annual retirement survey. More than half say they don’t earn enough or have too much debt to leave a lot of room for saving. Four in 10 expect to retire after 70 or not at all.

These insecurities probably reflect, to some extent, the poor retirement preparedness of Americans as a whole, not just women. In fact, women have made significant strides over the past half-century. A new study documenting their personal and economic progress since the 1970s finds that their financial standing, compared with men, has improved.

Granted, women are still a long way from pay parity. But the improvements in retirement preparedness are impressive because they occurred despite the fact that women have become more independent – they are more likely to be living on their own and supporting themselves. Roughly two-thirds of boomer women born after 1953 either have never married or have been divorced for some part of their adult lives, according to the Center for Retirement Research.

What undergirds their personal and financial independence are college degrees and women’s growing participation in the labor force over five decades.

One in three baby boomer women born in the mid-1950s through the mid-1960s has a college degree – twice that of their mothers who were born during the Great Depression. Armed with the degrees, young boomer women flooded into the labor force. Three-fourths were working between their mid-30s and mid-40s, compared with 57 percent employment in the Depression-era cohort at that age. Men’s labor force participation has been much higher historically but barely changes over time.

Black women have always worked more than White women. But they too increased their labor force participation as they gained more education.

So how has women’s robust participation in the work world bolstered their financial security? This depends to some extent on how it is measured. The amount of Social Security and pension wealth, as well as financial assets like 401(k)s, that older workers – both men and women – acquired over their lifetimes has declined, which helps to explain the financial insecurities women expressed in the Transamerica survey.

But a closer look, based on marital status, shows that the erosion has mostly occurred among women who have spent more than half of their adult years married. Their fortunes have declined because they are tied to their husbands, who apparently have been hit much harder by economic headwinds, especially the Great Recession.

Since the 1970s, the amount of wealth held by the typical mostly-married woman’s household has shrunk 23 percent, to $446,000 in today’s dollars. Contrast them with the growing ranks of mostly single women, whose wealth has gained significant ground relative to the married women their age. Although Black women have less wealth than White women, Black women who’ve never married are closing the gap with their married counterparts too.

To gauge boomer women’s retirement security, the researchers translated their wealth to an income replacement rate. This is the share of earnings from their working years that is, or will be, covered in retirement by the Social Security and other assets they’ve accumulated.

Regardless of marital status, wealth is supplying about a third of the pre-retirement income of boomer women born after the mid-1950s, the researchers found. More interesting, however, is the steep decline in replacement rates for married women’s households – about 37 percent currently for the typical woman born after the mid-1950s, down from 44 percent for married women born during the Depression.

“The large decline in median wealth for women who spend their lives mostly married largely reflects declining fortunes for their husbands,” the researchers said.

They conclude that divorced and never-married women – who are more educated, work more, and earn more than their mothers – have reached one form of parity: they “are as well prepared for retirement as married couples.”

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here.  This blog is supported by the Center for Retirement Research at Boston College.