RETIREMENT SECURITY

Older Women Remain at 

Risk 

Statement of Barbara D. Bovbjerg, Managing Director 

Education, Workforce, and Income Security 

Testimony 

Before the Special Committee on Aging, 

U.S. Senate

For Release on Delivery 

Expected at 2:00 p.m. EST 

Wednesday, July 25, 2012 

GAO-12-825T 

United States Government Accountability Office

GAO 
 

Page 1 GAO-12-825T 

Chairman Kohl, Ranking Member Corker, and Members of the 

Committee: 

I am pleased to be here to discuss the challenges women face in 

attaining a secure retirement. Historically, elderly women have been at 

greater risk than men of living in poverty for several reasons. As our 

previous work has shown, women continue to have lower average 

earnings than men, despite their increasing participation in the labor force 

over the last half of the 20th century.1

 They are also more likely than men 

to take time out of the workforce to care for family members and tend to 

live longer. Moreover, recent economic trends, including the economic 

downturn, reductions in public sector pensions, and the ongoing shift from 

a defined benefit pension system to a defined contribution system could 

exacerbate the risks women face in attaining a secure retirement. 

Over the past quarter-century, the percentage of private sector workers 

participating in employer-sponsored pension plans has held steady at 

about 50 percent. The majority of workers that do not participate in an 

employer plan lack access to one. In addition, over the last 3 decades, 

the U.S. retirement system has undergone a major transition from one 

based primarily on defined benefit plans to one based on defined 

contribution plans. This transition, in turn, generally shifted the burden of 

saving and decision-making to the individual worker and also increased 

workers’ exposure to economic volatility. This transition also has 

implications for the financial security of spouses. For instance, under 

defined benefit plans, the qualified joint and survivor annuity required by 

law may only be waived through a written spousal consent. However, 

under most defined contribution plans, an employee may withdraw funds 

from his or her account without spousal consent. 

Today’s testimony examines women’s retirement income security in light of 

these circumstances. It is based on a GAO report being released today.2

 In 

the report, we examined (1) how women’s access to and participation in 

employer-sponsored retirement plans compare to men’s and how they 

 

1

GAO, Retirement Security: Women Face Challenges in Ensuring Financial Security in 

Retirement, GAO-08-105 (Washington, D.C.: Oct. 11, 2007) and GAO, Gender Pay 

Differences: Progress Made, but Women Remain Overrepresented among Low-Wage 

Workers, GAO-12-10 (Washington, D.C.: Oct 12, 2011). 

2

GAO, Retirement Security: Women Still Face Challenges, GAO-12-699 (Washington 

D.C.: July 19, 2012). 

 
 

Page 2 GAO-12-825T 

have changed over time; (2) how women’s retirement income compares to 

men’s and how the composition of their income—the proportion of income 

coming from different sources—changed with economic conditions and 

trends in pension design; (3) how later-in-life events affect women’s 

retirement income security; and (4) what policy options are available to help 

increase women’s retirement income security. 

To address these questions, we analyzed two nationally representative 

datasets, conducted an extensive literature review, and consulted with 

numerous experts. For our first two objectives, we analyzed data from the 

Survey of Income and Program Participation (SIPP), a nationally 

representative dataset.3

 For our third objective, we developed a statistical 

model to estimate the effects of events occurring later in life, such as a 

decline in health and widowhood, on income and assets using data from 

the Health and Retirement Study (HRS), a nationally representative 

dataset that tracks Americans age 51 years or older over time.4

 We 

assessed the reliability of selected SIPP and HRS data and found that, for 

the purposes of our analysis, the data that we analyzed were sufficiently 

reliable. Finally, to identify policy options that could increase retirement 

income security among women, we conducted an extensive literature 

review and interviewed a range of experts in the area of retirement 

income security.5

We conducted this performance audit from March 2011 through July 2012 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence we obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

 

3

Specifically we used data from the 1996, 2001, 2004, and 2008 SIPP panel surveys, 

which are administered over a period of several years. 

4

We used all years of HRS data, including early release data for 2010. For more details on 

our methods, see GAO-12-699. 

5

To ensure that we obtained a balanced perspective, we interviewed experts with a range 

of perspectives and from different types of organizations including government, academia, 

advocacy groups, and the private sector. See the full report for more details. 
 

Page 3 GAO-12-825T 

Mr. Chairman, the following summarizes our findings on each of the four 

issues discussed in our report: 

Over the last decade, working women’s access to and participation in 

employer-sponsored retirement plans have improved relative to men.6

 In 

fact, from 1998 to 2009, women surpassed men in their likelihood of 

working for an employer that offered a pension plan—largely because the 

proportion of men covered by a plan declined (see fig. 1). Furthermore, as 

employers have continued to terminate their defined benefit plans and 

switch to defined contribution plans, the proportion of women who worked 

for employers that offered a defined contribution plan increased. 

Women’s higher rates of pension coverage may be due to the fact that 

they are more likely to work in the public and nonprofit sectors and 

industries that offer coverage, such as health and education. 

Figure 1: Proportion of Working Women and Men with Employers That Offered Any 

Type of Pension Plan and Defined Contribution Plans Specifically 

Note: Percentage estimates in this figure have 95 percent confidence intervals that are within +/- 1 

percent of the estimate itself. 

 

6

The statistics we present on employer-plan coverage, eligibility, and participation; income 

levels and composition; and poverty rates are point estimates computed from the SIPP 

data. 
 

Page 4 GAO-12-825T 

Despite women’s greater likelihood of having an employer that offered a 

pension plan, they were slightly less likely to be eligible for and to 

participate in those plans. Although women’s eligibility rates generally 

increased over time, by 2009 there remained a 4 percentage point gap 

between men and women in terms of eligibility. Of those who were 

eligible to participate in their employer’s pension plan, women had lower 

rates of participation than men. This gap, however, diminished over time 

as men’s participation rates declined (see fig. 2). Women who were 

eligible to participate in a defined contribution plan were less likely to 

participate for a variety of reasons, including that they made less money, 

on average, were more likely to work part-time, and were more likely to 

be single parents. Finally, women who participated in a defined 

contribution plan contributed to their plans at lower levels than men. 

Figure 2: The Proportion of Eligible Women and Men That Participated in Any Type 

of Employer-Sponsored Pension Plan or in Defined Contribution Plans (among the 

Population That Was Eligible for a Plan) 

Note: Percentage estimates in this figure have 95 percent confidence intervals that are within +/-2 

percent of the estimate itself. 

Women age 65 and over consistently had less retirement income on 

average and had higher rates of poverty when compared to men despite 

the fact that the composition of their income did not vary greatly over time. 

Specifically, the share of household income women received from earnings 

increased from 14 percent in 1998 to 16 percent in 2010, but was 

consistently lower than the share of household income men received from 
 

Page 5 GAO-12-825T 

earnings. Moreover, women’s median income was approximately 25 

percent lower than men’s over the last decade, and the poverty rate for 

women in this age group was nearly two times higher than men’s in 2010. 

Income levels and poverty rates did, however, vary by demographic group. 

Groups with the lowest median incomes and highest poverty rates included 

women who were not married, over the age of 80, and non-White (see fig. 

3). The composition of women’s income varied only slightly over time, in 

part, because their main sources of income—Social Security and defined 

benefit plans—were shielded from fluctuations in the market. 

Figure 3: Poverty Rates by Demographic Categories in 2010 for Women and Men 

Age 65 and Over 

Note: Estimates for men and women include spousal income. Percentage estimates of poverty rates 

have 95 percent confidence intervals that are within +/-1 percent for the category for the entire U.S.; 

+/-1 percent for married, +/-2 percent for widowed, +/-3 percent for divorced, +/-12 percent for 

separated, and +/-6 percent for never married individuals; +/-2 percent for all age-categories; +/-1 

percent for Whites, +/-4 percent for Blacks, +/-5 percent for Hispanics, and +/-8 percent for Asians. 
 

Page 6 GAO-12-825T 

Divorce, the death of a spouse, and unemployment all had detrimental 

effects on the total household assets and income for men and women 

nearing or in retirement (see table 1), and divorce and widowhood had 

more pronounced effects for women than for men.7

 For example, after a 

divorce or separation, women’s household income fell by 41 percent, on 

average, almost twice the size of the decline that men experienced. As a 

result of becoming widowed, women’s household income fell by 37 

percent while men’s only fell by 22 percent. These effects may help 

explain why elderly women have lower average incomes than men and 

are more likely to live in poverty. We also found, not surprisingly, that a 

decline in health after age 50 had a negative effect on household assets 

and income, for both men and women. 

Table 1: Estimated Effects of Life Events on Household Assets and Income by 

Gender 

Percent change 

Total household assets Total household income 

Women Men Women Men

Became divorced or 

separated 

-41a -39a -41a,b -23a,b

Became widowed -32a,b -27a,b -37a,b -22a,b

Became unemployed -7a -7a -9a -7a

Health declined -8a -10a -4a -3a

Source: GAO analysis of HRS data. 

Notes: We used statistical models to estimate the percent change in total household assets and 

income that occurs for an individual after a life event, relative to an individual that did not experience 

that life event. Total assets and income for the household were applied to each individual in the 

household. The estimated effects represent the average percent difference in household assets and 

income between all survey periods in which the household does experience an event and all survey 

periods in which the household does not experience an event. The event may have occurred in any 

year after the household entered the survey. Individuals in our sample were over age 50. 

a

Estimate is significantly different from zero. 

b

Difference between women and men is statistically significant. 

 

7

We estimated these effects using fixed-effects panel regressions with HRS data. 

Because this analysis pertains to individuals over the age of 50, these effects may not be 

generalizable to younger cohorts as women’s labor force participation and, 

correspondingly, their assets and income, have changed over the last several decades. 

Our report also examined the effects of helping parents financially or with personal 

activities, but did not find statistically significant negative relationships. 
 

Page 7 GAO-12-825T 

Experts we interviewed identified 22 existing policy options that could 

address some of the challenges women face in attaining a secure 

retirement and help decrease the risk of elderly women living in poverty.8

These policies can be categorized into six broad policy goals (see table 

2). For example, one set of options would expand the use of existing tax 

incentives, such as the automatic IRA, to encourage women to save more 

for retirement during their working years. Another set of options would 

help ensure income adequacy in retirement by, for example, providing an 

additional Social Security benefit to beneficiaries over the age of 80 or 85. 

All of these options could benefit men as well. At the same time, however, 

all of the options have cost implications that would need to be considered 

before they are implemented. For example, as with any federal spending 

program, any option that results in reduced or deferred federal tax 

revenue may require an offset, such as raising revenue elsewhere or 

cutting spending. While the federal government could bear some of these 

costs, workers and plan sponsors could be responsible for others. Lastly, 

some options may require legislative changes. 

Table 2: Policy Goals for Enhancing Women’s Retirement Income Security 

Expand the use of existing tax Incentives to save for retirement 

Expand eligibility and opportunities to accumulate Social Security credits 

Expand access to retirement savings and strengthen spousal protections 

Expand opportunities for saving later in life and delay Social Security benefit receipt 

Ensure lifetime income 

Ensure income adequacy 

Source: GAO analysis of literature and expert interviews. 

In conclusion, retirement security continues to be a national dilemma for 

both women and men. Recent economic volatility, coupled with the 

continued shift toward defined contribution plans, exposes all workers to 

more financial risk than in previous generations. Our work highlights, 

however, that women face a unique set of circumstances that warrant 

special attention. Women may have a more difficult time saving for 

retirement and avoiding poverty late in life, partly due to the fact that they 

have a greater likelihood of being single, living longer, taking time out of 

the workforce to care for family members, and having lower average 

 

8

For a detailed list of policy options, see the full report, GAO-12-699. 
 

Page 8 GAO-12-825T 

earnings when they are in the workforce. Further, our findings show that 

for recent generations of older women, late-in-life events, such as 

widowhood and divorce, can have devastating effects on women’s 

income and asset levels. According to the experts we consulted, many 

options exist for addressing the challenges women face, ranging from 

changes to Social Security to altering the pension system. While each 

option would require trade-offs and difficult choices, they could benefit 

both women and men and ultimately provide opportunities to improve the 

retirement security of many Americans. 

Chairman Kohl, Ranking Member Corker, and Members of the 

Committee, this concludes my prepared statement. I would be happy to 

answer any questions you or other members of the committee may have 

at this time. 
Appendix I: GAO Contact and Staff 

Acknowledgments 

Page 1 GAO-12-825T 

Barbara D. Bovbjerg (202) 512-5491 or bovbjergb@gao.gov

In addition to above, Charles Jeszeck, Michael Collins, Erin M. Godtland, 

Jennifer Gregory, Alicia Atkinson, Kathy D. Leslie, James Rebbe, and 

Shana Wallace made valuable contributions to this testimony. 

Appendix I: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Staff 

Acknowledgments 

(131189)
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