Thursday, September 25, 2008

"You can't save what you don't earn"

"You can't save what you don't earn"

When you woke up today and listened to your morning news show, were you worried about your current or future Social Security check? I know I wasn't. I am however concerned about the length of time it will take for my private retirement accounts to recover from the worst economic downturn of my lifetime, and eventually grow into an amount which could possibly allow me to retire free from poverty. The odds are not in my favor. The reality is that women's retirement and men's retirement look vastly different.

Women still earn fewer cents on the dollar than men 44 years after the passage of the Equal Pay Act. Fewer dollars earned means fewer dollars to save. I am expected to live on average six years longer than my male counterpart. I am also projected to spend up to twelve years caregiving for children, grandchildren, spouse, parents or grandparents. These twelve years of labor are of course unpaid.

Last year the Supreme Court slapped women in the face by saying that they need to file a pay discrimination case within 180 days of the first instance of pay discrimination. If this statute of limitations wasn't enforced, the flood gates of litigation could potentially spill open with an unconscionable and uncontrollable mob of women seeking a judicial remedy for discrimination. How tragic this could be for big business. Wait, will someone remind me why we have a court system -- I was under the impression that it was a way to remedy wrongs -- perhaps wrongs such as failing to follow the Equal Pay Act? Unless the Senate passes the House passed fair pay legislation and it survives a Presidential veto, it doesn't look like women can rely on being paid the same as men.

So, while I earn my $.77 on the dollar compared to men, I am happy to know that at a bare minimum, I am earning Social Security credits, even when I may not have additional money at the end of the month to place in a private retirement account. I know that my Social Security will be adjusted for inflation and is guaranteed by the government, which is a whole lot more secure than Wall Street. Additionally, I know that the trust fund is predicted to be solvent for at least 33 more years. And with some adjustments, the fund can be made to be solvent for many future generations

The Social Security system is an embodiment of the long-standing American principle of social insurance, providing nearly universal coverage for workers and their families through a pooling of resources, benefits, and risk.

Women are the majority of Social Security beneficiaries and rely more heavily on the benefit for retirement income. But I wanted to make sure you also knew that many young women depend on Social Security too. The disability and survivor benefits Social Security provides to families when a wage earner dies or becomes disabled is irreplaceable. Social Security needs to be maintained, strengthened and to take into consideration the value of caregiving to society.

If we ever moved to private accounts instead of Social Security, we would all have to rely on the risks of the stock market to make up the difference. Not a pleasant thought for Americans as we read the financial pages this week, but especially unappealing for women.

Ashley B. Carson
Executive Director, OWL


Fran said...

I'm sure I'm not the only retired OWL member who feels a sense of desperation as our invested assets diminish in value - fall off the cliff might be a better term. What can we do? An idea might be for the Congress to temporarily suspend Roth IRA rules to allow us to 1)claim our losses at income tax time (gains and losses in a Roth IRA don't register one way or the other on tax returns) and 2) move funds into the Roth IRA in spite of us not having compensation income(only wages can be invested in Roth IRAs now). Maybe there are other measures that my brain isn't able to conjure up.
I think what I'm asking is for OWL to go to bat for us.

Ellen said...

Creative thinking is what we need in approaching the current crisis and how it affects the many OWL members who have saved in IRAs only to find those savings evaporate. Teresa Ghilarducci had an op ed artical in the NY Times on 9/27/08 which recommended a 401(k) for people without traditional pensions that is guarenteed by the government. The same concept could be applied to IRAs.