How Retirement Readiness Varies by Gender and Family Status: A Retirement Savings Shortfall Assessment of Gen Xers

Measuring retirement security — or retirement income adequacy — is an extremely important topic. In recent years, there has been an increasing emphasis on the retirement income adequacy of widows and single women. EBRI’s Retirement Security Projection Model® (RSPM) can assess the size of households’ retirement deficit by modeling Retirement Savings Shortfalls (RSS). In this Issue Brief, an RSPM® module classifies households by the following gender and marital statuses: single female, widow, single male, and widower. Key findings are: The retirement deficit — or additional savings required to meet basic needs in retirement — is higher for both widows and single females: - The average RSS is $18,476 per individual for married households where the female dies first (widowers). - The average RSS is $22,783 for married households where the male dies first (widows). - The average RSS is $37,690 for single males. - The average RSS is $72,883 for single females. - When households for which no shortfall is projected are excluded from the analysis, the average size of the shortfall is $76,896 for widows vs. $82,937 for widowers. Single females in the lowest pre-retirement wage quartile have an average RSS of $110,412 vs. those in the highest quartile with an average RSS of only $28,951. For single males, the gender discrepancy in average RSS goes from $29,736 for those in the lowest wage quartile to $12,465 for those in the highest quartile. Not only are single females more likely to have retirement deficits, their retirement deficits are likely to be significantly larger than those of other cohorts. - Single females are the only cohort with at least 50 percent of households having a deficit. - The median RSS for this group is $19,900. - 10 percent of single females have an RSS of at least $222,592. Nearly half (48 percent) of single females at the lowest income quartile have at least a $100,000 RSS (connoting serious potential financial complications in retirement). - This compares to a third (33 percent) of single males and 42 percent of widows. - Even in the highest income quartile 13 percent of single females have an RSS of at least $100,000, vs. 7 percent for single males, 4 percent for widows, and 3 percent for widowers. Lack of eligibility for participation in a defined contribution (DC) plan significantly increases savings shortfalls. - Single females with no future eligibility in a DC plan have an average RSS of $97,325 vs. the $24,486 average RSS of those with at least 21–30 years of future eligibility. o - DC plan eligibility. - The discrepancy in average RSS between widows and widowers with no future DC plan eligibility is $6,529. In contrast, future eligibility in DC plans can dramatically reduce serious potential financial complications in retirement. - 42 percent of female households with no future DC plan eligibility have an RSS of at least $100,000 compared with 11 percent of those with 21–30 years of future eligibility. - 13 percent of widows with no future DC plan eligibility have an RSS of at least $100,000, vs. 3 percent with 21–30 years of future eligibility. Auto portability — where a participant’s account from a former employer’s retirement plan would be automatically combined with their active account in a new employer’s plan — can also have a large impact. - For those with 21–30 years of future DC eligibility, auto portability.