The Social Security Administration distributes retirement benefits to nearly 60 million Americans. And of those beneficiaries, nearly 60 percent are women.
The SSA is led by a woman, too. Carolyn Colvin was once retired herself, collecting benefits from the agency she now serves. A call from President Obama brought her back in 2010, and she recently took over as acting commissioner. As part of Morning Edition's look at the changing lives of women, Colvin spoke with Kelly McEvers about how women plan for financial security.
Colvin points out two realities she hopes women consider when planning for retirement. First, women make less money than men on average; when they stop working, their monthly Social Security checks are smaller, too.
Also, women tend to live longer than men. Colvin encourages women to estimate their own life expectancy with the SSA's calculator, and find out more about their benefits. Doing so, she says, often makes women realize they can outlive their savings — and that retirement benefits alone won't be enough.
On men's vs. women's retirement benefits
The average amount [in 2014] is a little over $17,000 per year for men and a little over $13,000 per year for women. One of the reasons that women are likely to have lower lifetime benefits is because they often have lower lifetime earnings than men. They are more likely than men to take time out of the workforce to care for family members. And of course we still have the issue of gender inequality [in wages].
On the importance of personal savings
Social Security was never intended to be the primary source of retirement. It was to be one of three legs on a stool, we always say. ... And then, of course, private pension and savings. And we know now that many of the private pensions have been reduced. Some women work in jobs where they really don't have a private pension, and of course many women — particularly low-income wage earners — find themselves just not saving as much as they should in order to ensure that they are able to have a decent income during retirement.
On ways women can plan for the future
One of the things we try to focus on is encouraging women, even at very young ages, to begin to save. ... Many women will say they don't have the ability to save, and what I say is that they cannot afford not to save.
For me, I had to find a way of saving where I would not in fact use that money later. And so I found, for me, real estate was the key. I also found that it did not make sense to leave money on the table, so for every job I've worked where there has been an opportunity for the employer match, I've maximized that.
The most important thing is you need to spend below your means. Maybe it's giving up soda, or giving up cigarettes. ... And then each time they get a raise, don't take that raise. Put it into a 401(k). They haven't gotten used to spending it. It's there. And it will grow.
KELLY MCEVERS, HOST:
This month, MORNING EDITION is looking at women and wealth: how women earn, access and invest money and plan for financial security. And, on this Tax Day, we thought what better person to ask about that than someone who pays out some of the taxes we pay in.
Carolyn Colvin is the acting commissioner of Social Security Administration. She joins us this morning from her office in Baltimore.
CAROLYN COLVIN: Good morning.
MCEVERS: A lot of people might think of Social Security as a kind of safety net for when they get older and they stop working. But, in fact, it's not something that really goes that far. And we're seeing there's huge differences in how Social Security plays out for women. First off, about 60 percent of the people who get Social Security are women. Is that right?
COLVIN: That's correct. We found now that more women work. They pay Social Security taxes. They earn credit toward monthly retirement income at this time than at any other time in our nation's history. And, of course, we found that women, due to a number of factors, seem to benefit more from this program than men.
MCEVERS: Yet what older women collect is considerably lower than what men collect. So I was wondering if you would help me out, here. Let's take an average 65-year-old woman and a man of the same age, both of them are retired. What's the amount, on average, that they're receiving in 2014?
COLVIN: Well, the average amount would be a little over 17,000 per year for men, and a little over 13,000 per year for women. One of the reasons that women are likely to have lower lifetime benefit is because they often have a lower lifetime earnings than men. They're more likely than men to take time out of the workforce to care for family members. And, of course, we still have the issue of gender inequality.
MCEVERS: But yet we know that women live longer than men. And so they're going to have to live longer on less, right?
COLVIN: Well, that's one of our challenges. Social Security was never intended to be the primary source of retirement. It was to be one of three legs on a stool, we always say. And so, we were looking at Social Security being the basic foundation and then, of course, private pension and savings. And we know now that many of the private pensions have been reduced, some women working jobs where they really don't have a private pension. And, of course, many women - particularly low-income wage earners - find themselves just not saving as much as they should, in order to ensure that they are able to have a decent income during retirement.
MCEVERS: When Social Security was first created back after the Depression, the idea was to keep people out of poverty. But now it seems like it's still doing that. Some studies show that three in 10 women, Social Security is like 90 percent of their entire income. Is that what Social Security should be right now? I mean should we still be at a place where we're barely keeping women out of poverty?
COLVIN: Well, I think it does keep women out of poverty. And one of the things we stress again, it was never intended to be the sole source. One of the things we try to focus on is encouraging women, even at very young ages, to begin to say there has to be personal responsibility of saving. Many women will say they don't have the ability to save, and what I say is they cannot afford not to save, that they need to save some portion of their income and put aside for retirement.
MCEVERS: So, I think going forward, women will still have different working circumstances. You know, we're still likely to interrupt our work to take care of children or elderly family members. Do you have any real like sort of practical day-to-day advice for young working women now?
COLVIN: Well, for me, I had to find a way of saving where I would not in fact use that money later. And so I found, for me, real estate was the key. I also found that it did not make sense to leave money on the table, so for every job I've worked where there has been an opportunity for the employer match, I've maximized that. And over years that compounds in interest.
And the most important thing is you need to spend below your means. One of the things I tell the young people, just put in a small amount. Maybe it's giving up a soda or giving up cigarettes, which they shouldn't be doing anyway. And then each time they get a raise, don't take that raise. Put it into a 401(k). They haven't gotten used to spending it. It's there. And it will grow. And so I think that there are little tricks that you can do to be able to increase some security for your future.
MCEVERS: But it's not an easy message, is it? I mean it's hard to say that when there is nothing tangible that you can sort of point to on how this is going to benefit you in 50, 60, 70 years.
COLVIN: Well, it's hard when you have a low wage and you're just trying to make ends meet. But the reality is that the life expectancy has substantially increased. You can go to a life expectancy calculator on our website. Now I've done that. I have a life expectancy of 17 more years, of course, I'm counting on that being wrong; I want to live a little longer.
COLVIN: So 71 for me, I'm 71 years old, 17 years would make me 88. I really want to live to be 100.
MCEVERS: I don't think I want to do the life expectancy. Maybe I don't want to know.
COLVIN: Well, I want to know. And I think that remember, it has a lot to do with a number of things that you can't control, you know, hereditary issues, etc. But it just gives you a sense of the fact that you could outlive your money and you need to plan to live a little bit longer. When I started planning I thought, you know, 67, 70, because that's what we had on my father's side. Now I say 90, because my mom lived to be 89. We know that people are going to live longer and so if they want some quality of life, there's going to have to be some focus on saving for the future.
MCEVERS: That's Carolyn Colvin, she's acting commissioner of the Social Security Administration.
Thank you so much.
COLVIN: Thank you very much.
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MCEVERS: To read financial advice from Caroline Colvin and other women we talked to for our Women and Money series, visit our Tumblr at sheworks.tumblr.com.
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MCEVERS: This is MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.