Decision Making Retirement

At the beginning of the twenty-first century, issues related to retirement were receiving increased political attention. The number of people reaching the peak retirement years will increase rapidly early in the century as members of the baby boom generation reach their sixties. The number of very old people is also likely to grow due to expected longevity increases for both women and men. The changes that will be needed in the Social Security and Medicare systems to insure benefits for such a large retired population is the subject of heated public debate.

Feminist economists have pointed out that many proposed changes fail to consider that the majority of Social Security and Medicare beneficiaries are women, and that women are more dependent on these forms of social insurance than men. In 1998, for example, unmarried women age sixty-five and over received about half of their retirement income from Social Security. For 25 percent of unmarried retired women, Social Security was the only source of income. It is important for the system to give careful consideration to the importance of Social Security for this group.

Many proposed changes are likely to be especially harmful for women with modest incomes. Privatization schemes usually involve large reductions in regular Social Security benefits in the hope that private accounts will make up the difference; this is risky, however, especially for small accounts with high administrative costs. Plans that maintain the current benefit structure, while making smaller cuts, sometimes favor policies such as scaling back cost-of-living increases, which would be most harmful for the oldest of the old (predominately women). Other policies that are less harmful for women and other low earners include increasing the amount of earnings subject to the payroll tax or taxing Social Security benefits like other pensions. Even a small percentage cut in all benefits would be less harmful to women than many of the other proposals being discussed.

Women are more likely than men to time retirement based on family caregiving responsibilities. Although some older men perform unpaid caregiving for family members, older women are much more likely to ‘‘work’’ in retirement as caregivers to spouses, parents, or other relatives. Advocates for women contend that policies intended to raise the ages at which most people retire from paid employment should take the needs of unpaid caregivers into account.

Women and men experience retirement differently. These differences may lessen, but are not likely to disappear, in the future. Gains in women’s retirement income resulting from longer careers are also expected to be offset by the number of women entering retirement as either divorced or never married. For the foreseeable future, therefore, issues of gender are likely to remain important for studying retirement timing and the economic status of retired persons.