Giving Moms the Gift of Financial Security
As we prepare to celebrate mothers this weekend, what better way to pay tribute than to actually “pay” them back? Proposed retirement security legislation hopes to do just that. Recognizing that women, especially mothers, face many hurdles when saving for retirement, proposals in the U.S. House and Senate are looking to give women a leg up.
Lawmakers understand that many mothers of young children, due to their absence from the labor force during child-rearing years, experience gaps in opportunities to contribute to a workplace retirement plan. Also, women act nearly twice as often as men as caregivers for their adult parents, which can significantly dampen their retirement savings.
On average, a woman could lose more than $142,000 due to leaving the labor force early because of caregiving responsibilities. This can significantly impact a woman’s Social Security benefits. Additionally, woman caregivers are much less likely to participate in an employer’s 401(k) program. Among single women 50-years-old and older, 35.8% of caregivers participate in a 401(k) plan, compared to 43.6% for non-caregivers.
To combat this, the Securing a Strong Retirement Act (SSRA) of 2022 and the Retirement Security and Savings Act (RSSA) provide women more time to contribute to a retirement account, while also allowing “catch-up” contributions to help boost account balances. Given women’s longevity rates, these tools make sense. SSRA also would require automatic enrollment into a workplace retirement plan, to help increase participation rates, especially among women.
As women transition in and out of the workforce, keeping tabs on retirement savings can be challenging, as well. The Retirement Savings Lost and Found Act of 2021, helps savers locate retirement accounts to which they have contributed.
Military spouses, usually women, face barriers to save due to the transient nature of military assignments. They are typically not employed long enough to be eligible for an employer-provided retirement plan or to vest in employer contributions. Both SSRA and RSSA provide a tax credit to small employers to combat this.
Mother’s Day comes once a year. But the benefits from these proposals will last a lifetime. Lawmakers should work now to enact a comprehensive retirement package that will truly benefit moms.