Think the Economic Outlook Is Bad for You? Try Being an Aging Woman

/PRNewswire/ -- With major U.S. corporations declaring bankruptcy and the housing market persisting in its decline, can the financial picture get any worse? If you're an aging woman, the answer is yes.

A report released today by the Women's Institute for a Secure Retirement (WISER) tackles this issue head-on. Based on interviews and a day-long roundtable discussion with more than 30 retirement experts, How Can Women's Income Last As Long As They Do? moves beyond the traditional debate over how to amass savings for retirement and focuses instead on what to do with assets once retirement comes. The report asks the fundamental question: "How can our society protect our nation's older women against significant financial risks in retirement?"

Convened by WISER, retirement experts met in Washington to identify the appropriate role of government, employers, the financial services industry, families and women in making sure women's income lasts as long as they do. The WISER report is based on the roundtable discussion and survey research provided by Mathew Greenwald & Associates and the MetLife Mature Market Institute.

The concerns about retirement income insecurity are not new: People aren't saving enough, they're not investing intelligently, and they aren't going to have enough money to live 30 years or more in retirement. When it comes to women in particular, these concerns are far more pressing:

-- Women at age 65 are expected to live, on average, another 20 years --
four years longer than men. Money they have saved for retirement, if
any, must last longer than men's.
-- Less than half of today's working women have access to pension or
retirement savings plans at work.
-- Women are likely to spend some of their retirement years alone due to
widowhood or divorce. For women age 85 and older, only 13 percent are
married with a spouse present.
-- Nearly 40% of older women living alone depend on Social Security for
almost all of their income, and more than half would be living in
poverty were it not for their Social Security benefits.


"Women are at real risk of living a life of poverty in their older years," says Cindy Hounsell, President of WISER. "As a group, we tend to live longer, earn less, and take time away from paid work to care for our families, and we have less in retirement savings."

The reality is that one in five single women age 65 or older lives in poverty. But common retirement planning guidance leaves us all at risk. The goal, according to many advisers, is to save enough money to support our life expectancy. But people -- especially women -- don't need life expectancy income, they need lifetime income. The gap between these goals is the crisis confronting millions of women in retirement.

"With workers losing so much of their retirement savings to our volatile economy over the past year, being able to stretch what's left over a lifetime is even more important," says Hounsell. "All of us have a responsibility -- employers, government, the financial industry, and individuals -- to find a meaningful solution to retirement poverty for women."

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Economic Crisis Impacting Foreign Workers And Their Home Countries

The ongoing financial crisis could easily turn into a global humanitarian crisis, but not for the reasons you might think. Yes, the worldwide recession means that developed countries will buy fewer products from the developing world, build fewer factories there and even give fewer dollars’ worth of aid. But a potentially bigger threat to the well-being of developing countries is that remittances -- the cash that migrant workers send to the loved ones they leave behind -- appear to be falling, for the first time in decades.

Millions of people around the world leave their home countries to find work in foreign lands. They are an incredibly diverse group that includes cab drivers and construction workers, engineers and accountants. The one thing they have in common is they scrimp and save in order to send a few hundred dollars whenever they can to their families back home. These remittances are a lifeline for those who receive them -- research shows the vast majority of remittances are spent on food, medicine, shelter and other necessities.

Although each remittance is small, together they are huge, especially in comparison to the size of the economies that receive them. The latest estimate from the World Bank puts their magnitude at roughly $283 billion this year, and for many countries remittances are larger than the foreign aid or private investments they receive. Some of the largest recipients of remittances are people in the Philippines, India, Pakistan, Brazil and Egypt. In Mexico, families receive more than $26 billion in remittances each year, primarily from people working in the U.S.

Remittances’ most important economic and social effect is they directly alleviate poverty by providing significant income to some of the poorest members of society. This makes remittances very different from foreign aid or trade, which at best trickle down to the poor. And remittances have been a remarkably stable source of income, serving as a buffer against bad times. When a developing economy suffers a downturn, more people migrate and the migrants send more remittances to their loved ones. This process has made remittances a tremendous stabilizing factor in many developing nations.

Until now, that is. There are already signs that the global slowdown is affecting the demand for migrant labor in both the industrialized and the Persian Gulf countries, the main sources of remittance income. In fact, the most recent numbers show that remittances to Mexico, the Middle East and Africa have dropped considerably. If this trend continues, which is likely given the depth of the impending recession, the impact on the recipient countries could be severe.

For countries like Lebanon, for example, where remittances account for more than 21 percent of GDP, a drop in these flows could send the government budget and the economy into a tailspin. The same could be said for other remittance-dependent countries such as Pakistan, which is already suffering from social and political unrest. Even the Philippines, thought to have escaped the brunt of the crisis so far, may feel its impact if remittances fall from their current level of more than $13 billion per year.

What will happen when the safety net that hundreds of millions of people have come to rely on fails? At the very least, we will see an increase in the number of people suffering from hunger and disease. Unemployment will rise to even higher levels as migrants who lose their jobs are forced to return home. Social unrest will likely follow, and as we have seen too many times already, it will not be limited by national boundaries.

The upshot is there is far more at stake than we realize in getting our own financial and economic problems sorted out, and quickly. The fates of millions of people who are directly linked to our economy through remittances also depend on our decisions.

By Connel Fullenkamp
Duke University

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