# Presentation: 218800

## Gender and Other Aging Issues: Some thoughts for the White House Conference on Aging

- By Estelle James

## Four big issues to discuss at White House Conference

- How to design an IA system for low cost and low risk
- How to expand the role of older people in the labor market
- Life style for physical and mental fitness—healthy aging
- Special problems of older women

## Individual accounts in a strengthened social security system

- As population lives longer, pay-as-you-go social security systems are in financial trouble
- Pre-funding provides a sounder financial base.
- But if there are funds, someone has to manage them—who?  Public management in other countries—political manipulation, low returns. Under IA’s, management is private, competitive
- Maximizes financial return to members
- May be used to raise national saving, therefore productivity, growth and security
- Actuarial fairness encourages later retirement
- But—must be done right.

## How to do IA’s right

- IA’s can be good or bad, depending on details
- Keep administrative costs low
- Keep risk under control—diversification, floors
- Stretch payouts over entire lifetime (no lump sum)
- Safety net (with work incentives)
- Rethink treatment of women-don’t penalize work
- Remember that national saving won’t increase unless someone’s spending is decreased
- Other  measures needed as people live longer—raise  revenues? slow benefit growth? postpone  retirement?
- Useful to have discussion about how to do IA’s right

## Expanding labor market role for older workers would be good for economy, health and morale

- Legal and social obstacles—what are they and how can they be removed?
- Payroll tax > incremental benefits for older workers; could exempt workers > 65 from tax (would encourage labor supply and demand—as it did in Chile)
- Raise retirement age to 70 for ss benefit & let IA fill in gap at 65; person may work longer to save his/her IA
- Employer must be primary health insurer, but this is expensive for older workers. Could make Medicare  primary, employer plan secondary for workers > 65
- Good opportunity to start discussion about which institutional barriers can and should be removed by legislation

## Big push for physical and mental fitness—healthy aging

- Soon baby boomers will be filling age groups 50-70. Important (for health system, economy) to keep this population bulge healthy longer
- Research shows that good life style (exercise, nutrition) raises quantity and quality of life
- Exercising (and working) keeps brain alive too
- Some baby boomers have figured this out, but many haven’t
- We should make a big public health push for healthy aging (like anti-smoking, anti-cholesterol campaign)--a great non-political conference topic

## Special problems of women 

- Greater longevity--majority of old and great majority of very old will be women
- 53% of people age 65-69, 61% of people age 85-89 are women (1.5/1 F/M ratio at 85)
- Women are younger, live longer than spouses
- At age 65-69, 34% women, 7% of men are widows
- Age 85+, 9% of women, 48% of men, live with spouse
- Women have worked less, earned lower wages
- Have very small pensions or no pensions at all
- Non-indexed pensions fall in value by end of women’s life (at 3%, price level doubles age 65 to 90); even lower compared with rising wages of workers
- Outlive savings, husband’s pension, suppl. health ins.
- Therefore  very old women are pockets of poverty
- Even bigger problems for single, divorced women

## What can women do to prepare?

- Work, save, postpone retirement
- if she works to 20-60, lives to 90, W/R period=1.3
- If she works to 20-70, lives to 90, W/R=2.5
- Retiring later give higher pension or at lower cost
- Financial security comes with own work & saving
- Women need to do financial planning, invest, learn risk-return trade-off
- And women need to keep healthy for longer—life style and quality of life especially important, given greater quantity of life

## Current policies in US penalize single women and women who work in labor market

- Single women don’t get same benefits as married women (spousal benefit, widow’s benefit)
- Women married to high income men get larger benefits than poor single woman who has worked
- Married women who work must give up own benefit to get widow’s benefit--no incremental gain for years of contributions (work disincentive)
- Progressive ss formula doesn’t distinguish between low wage rate & low work. Discourages work, which would increase women’s security

## Women were bigger gainers from new IA systems in Latin America. Reasons:

- They require annuitization or gradual withdrawal
- Pensions (annuities) are price-indexed in Chile
- Husband required to purchase survivors benefits while working, joint annuity (or jt. pension) at retirement--protects widows with no public cost
- Allow women to keep their own benefit in addition to joint annuity
- Strong social safety net (MPG in Chile, small flat govt. payment into IA per day worked in Mexico)
- Safety net, reward work, stress family contract through survivors benefits, joint annuity

## Long term care

- This is a women’s topic because women live longer, alone, more prone to diseases of aging--dementia, macul. degen. How care for them?
- In traditional societies—extended family
- In low income societies—household help
- Problem in high income countries like US because small families & mobility so custodial care (low tech) is needed for very old but labor is expensive
- Pros and cons of public and private insurance
- How to finance long term care and get high quality care?—good topic for brainstorming

## Discussion topics for White House conference

- How to design IA’s for low cost, low risk
- How to remove institutional and legal barriers to keeping older workers in labor markets
- Promote big public health push for active aging
- Rethinking special needs of older women
- Remove penalties for working women
- How to provide financial security for widows & singles
- Long term care
- Baby boomers need to plan pro-actively for their old age, which will start soon and continue for many years. White House Conference should point the way toward policy issues