EBRI Issue Brief
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.
- The average RSS is $39,016 worse for single females than for single males with no future 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 reduces average RSS by 21 percent for single females to as much as 38 percent for widowers.