Older Women's Income and Wealth Packages in Cross-National Perspective
The portrait that we have sketched holds important policy implications for the United States. First, American older women’s exceptionally high-income poverty rates highlight the weakness of the public income transfers leg of the stool, including both the social insurance and the public assistance components. While private income sources – earnings and to some extent financial assets – are more prevalent in the United States, especially among middle-income elders, and while this self-reliance is commendable, it is also risky and does not ensure the economic security of those lower down in the wealth distribution. Although we recognize the fiscal concerns associated with pay-as-you-go public retirement programs, this public leg is so far more reliable and more effective at protecting elders in all demographic groups from the economic uncertainties that characterize all market-based income sources.
In the US, social assistance for the elderly stands out for its strict financial asset test; several of our comparison countries have social assistance rules that place no limits on low-income elders’ liquid assets. Increasing allowable assets and providing more adequate benefits would go a long way toward bringing economic security to older women near the bottom of the income distribution. Governments in other rich countries provide more effective public income safety nets for the elderly, with adequate and well-maintained minimum benefits at low fiscal cost to ameliorate income and asset vulnerability. Indeed, the country in our study with the strongest public income leg, Sweden, seems to perform better both in fighting income poverty and in shoring up private assets than does the institutional arrangement now operating in the United States.
While American older women’s high rates of asset poverty are not exceptionally high in cross-national perspective, they are worrisome nonetheless. As we have reported, 40 percent of American older women overall, and nearly half of older single women, do not possess financial assets equivalent to even six months of income at the poverty line. Many income-poor older women do own their homes – two-thirds of older income-poor women live in home-owning households and half of income-poor single older women own their homes – but the value of those homes is not great and may be difficult to access in time of hardship, and of course home-owning itself is not costless. This suggests that policymakers ought to identify better and more reliable methods to strengthen assets among older women, beyond reverse-annuity mortgages or borrowing against the value of their own homes, as the income and asset poor will receive little benefit from such programs.