Growing up with my four sisters, I saw my parents struggle with their laundry and dry-cleaning business to provide for us financially. Through their tremendous sacrifice and an ethic of saving money at a young age, regardless of how small the amount, today two of my sisters are pharmacists and two others are health-care executives. My sisters and I are fortunate women who were able to scrape by with scholarships, grants, loans, and work to put ourselves through college. Yet we know many others do not have the ability to attain financial security today because of gender inequalities.
Despite a stubborn pay disparity and an often unbreakable glass ceiling, women are driving the world’s economy. Women control 70 percent of global consumer spending, and 75 percent of women identify themselves as the primary shoppers for their households. A record 40 percent of American households now have women serving as the primary or sole breadwinners. How can women harness this consumer spending power and use it to attain financial security, especially when it is needed most, in retirement?
The majority of American women are facing a retirement security crisis. Women on average save about 7 percent of pay. Of lower-income retirees in California, 70 percent are women. Women age 65 and older living in poverty outnumber men by more than two to one. Adding to the money crunch, women at age 65 are expected to live another 19 years – three years longer than men. Single women face a greater hurdle without the added financial support of a dual-income household to pay living expenses and the cost of raising children. These sobering statistics should come as no surprise because retirement benefits are based on the accumulation of lifetime earnings.
The gender pay gap in California stands at 84 percent. A new report found that rather than the gradual improvement we have seen in the past, the gender pay gap is widening. Another reason for the disparity: more women are employed part-time and work for smaller employers less likely to offer pensions or employer-sponsored retirement plans. Closing the pay gap would not only help fund women’s retirement but would increase pay into Social Security, potentially ensuring everyone’s retirement security in the long run.
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Family caregivers are predominantly female, and women are more likely than men to take time off from work for caregiving. Longer and better paid family leave would improve retirement savings for caregivers by keeping them employed. More women in the workforce equates to economic growth. Some estimates indicate if women were fully engaged in the U.S. economy, GDP would grow by up to 9 percent.
For the lowest-income Californians, 80 percent of retirement income comes from Social Security benefits. Those with inadequate savings or who rely solely on Social Security may have no choice but to depend on government programs for support.
As the state’s chief fiscal officer, my primary job is to guard the state’s financial health. However, I am equally concerned about the financial well-being of individual Californians. We must not allow senior women to fall into deep debt, foreclosure, bankruptcy, and even homelessness because of the retirement crisis. This is not only a moral issue for men and women, but it is imperative for a stable economy.
Let’s all step up, engage, and assert our economic power – or women will continue to fall behind. Women need to leverage our share of the marketplace and insist on pay parity and gender diversity in the workplace. If your employer does not offer a retirement plan, ask for one. Before long, the Secure Choice Retirement Savings Plan will be available for Californians without access to a workplace retirement savings program.
Money talks. Spend yours at businesses that hire and promote women, pay them fairly, and provide them economic security. There are even smart phone apps that allow you to scan an item’s barcode, revealing if the company promotes diversity and equal opportunity. We must send a clear message – women deserve retirement security after a lifetime of work. Let’s make our wallets do the talking.
State Controller Betty Yee is California’s chief financial officer and serves on the boards of CalPERS, CalSTRS, and the Secure Choice Retirement Savings Investment Board.