Cleveland Plain Dealer, March 20, 2008: Women, blacks face poverty in retirement
V. David Sartin
Plain Dealer Reporter
Nearly twice as many women as men will face poverty in retirement, according to the incoming president of the American Association of Retired Persons.
Prospects for financial security in old age are starkly more bleak for minorities, said Jennie Chin Hanson, formerly the executive director of an elder care agency in San Francisco.
Women must learn details of their family finances and begin planning for retirement early in life, said Hansen, a former nurse.
Speaking to an audience of elder care providers at the City Club of Cleveland, Hansen cited several AARP-sponsored studies and reports that suggest an emerging risk of poverty for women.
The poverty rate in retirement for black women is nearly three times the rate for white women.
Nearly two-thirds of white women who are poor in old age were not poor in earlier years.
Women face challenges in preparing for retirement because they often earn less than male counterparts, often must periodically leave the work force to provide family care and often have not adequately planned for retirement, she said.
Hansen, who becomes AARP president in May, offered several tips for retirement planning.
Women should become financially literate. “People who understand compound interest are much more likely to plan for retirement,” she said.
Existing Social Security benefits frequently provide only about 40 percent of financial needs, estimates show. Today, many retired women qualify for only about $1,100 per month in Social Security, she said.
Retirees will need about 70 percent of the pre-retirement income to maintain their lifestyles, she said.
Workers should participate in company-subsidized retirement savings plan, like 401(k) programs. Employees should contribute enough to gain the maximum contribution from their employer, she said.
AARP was organized 50 years ago as a method to provide health insurance to retirees. The nonprofit organization has nearly 40 million members and annual revenues and expenses of about $1 billion.