[Joint House and Senate Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                                                        S. Hrg. 113-363

                      WOMEN'S RETIREMENT SECURITY

=======================================================================



                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 21, 2014

                               __________

          Printed for the use of the Joint Economic Committee





                  U.S. GOVERNMENT PRINTING OFFICE
88-948                    WASHINGTON : 2014
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001



                        JOINT ECONOMIC COMMITTEE

    [Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]

HOUSE OF REPRESENTATIVES             SENATE
Kevin Brady, Texas, Chairman         Amy Klobuchar, Minnesota, Vice 
John Campbell, California                Chair
Sean P. Duffy, Wisconsin             Robert P. Casey, Jr., Pennsylvania
Justin Amash, Michigan               Bernard Sanders, Vermont
Erik Paulsen, Minnesota              Christopher Murphy, Connecticut
Richard L. Hanna, New York           Martin Heinrich, New Mexico
Carolyn B. Maloney, New York         Mark L. Pryor, Arkansas
Loretta Sanchez, California          Dan Coats, Indiana
Elijah E. Cummings, Maryland         Mike Lee, Utah
John Delaney, Maryland               Roger F. Wicker, Mississippi
                                     Pat Toomey, Pennsylvania

                 Robert P. O'Quinn, Executive Director
                 Niles Godes, Democratic Staff Director


                            C O N T E N T S

                              ----------                              

                     Opening Statements of Members

Hon. Amy Klobuchar, Vice Chair, a U.S. Senator from Minnesota....     1
Hon. Richard L. Hanna, a U.S. Representative from New York.......     4

                               Witnesses

Dr. Debra Whitman, Executive Vice President, Policy, Strategy and 
  International Affairs, AARP, Washington, DC....................     5
Dr. Brigitte Madrian, Aetna Professor of Public Policy and 
  Corporate Management, Harvard Kennedy School, Cambridge, MA....     7
Ms. Cindy Hounsell, President, Women's Institute for a Secure 
  Retirement, Washington, DC.....................................     9
Ms. Rachel Greszler, Senior Policy Analyst, Economics and 
  Entitlements, Center for Data Analysis, The Heritage 
  Foundation, Washington, DC.....................................    11

                       Submissions for the Record

Prepared statement of Hon. Richard L. Hanna......................    28
Prepared statement of Dr. Debra Whitman..........................    29
Prepared statement of Dr. Brigitte Madrian.......................    41
Prepared statement of Ms. Cindy Hounsell.........................    46
Prepared statement of Ms. Rachel Greszler........................    55


                      WOMEN'S RETIREMENT SECURITY

                              ----------                              


                        WEDNESDAY, MAY 21, 2014

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:03 a.m. in Room 
216 of the Hart Senate Office Building, the Honorable Amy 
Klobuchar, Vice Chair, presiding.
    Representatives present: Paulsen, Hanna, Carolyn B. 
Maloney, Delaney, and Jenkins.
    Senators Present: Klobuchar.
    Staff present: Hank Butler, Gail Cohen, Connie Foster, 
Niles Godes, Colleen Healy, Robert O'Quinn, and Steve Robinson.

  OPENING STATEMENT OF HON. AMY KLOBUCHAR, VICE CHAIR, A U.S. 
                     SENATOR FROM MINNESOTA

    Vice Chair Klobuchar. All right, we are going to begin the 
hearing. I want to thank everyone for coming. We have a full 
house today, and I want to thank many of the visitors that we 
have. I know the AARP volunteers are on the Hill today, and we 
also have State staff who are joining us for the hearing. Thank 
you, as well as many other visitors.
    I want to specifically mention our Minnesota AARP people, 
Will Phillips, who is the new AARP Minnesota State Director, as 
well as Jim Scheibel, who is a former Mayor of St. Paul. So I 
want to thank them for being here. I am going to meet with them 
later on today, and I'm looking forward to it.
    I also want to thank Congressman Hanna, who is our chair on 
the House side today. I know Representative Brady had another 
commitment, and I really appreciate that he allowed us to go 
forward with this hearing, and Representative Hanna is here. 
And I also want to thank Ms. Jenkins, who is a visitor, a 
Congressional Visitor from the State of Kansas. So we are 
excited to have her, as well.
    The role of women has changed dramatically, as we all know, 
over the past few decades. And much of the credit goes to women 
who have come before us and created opportunities, broken down 
barriers, and paved the way for generations to come.
    Even with this progress, we know that there is still more 
work to do and we need to ensure that women have access to 
opportunities and are able to plan, save, and increase their 
economic and financial security as they approach retirement.
    I would first like to introduce our distinguished group of 
witnesses here. We have Dr. Debra Whitman. She is Executive 
Vice President, Policy, Strategy and International Affairs at 
AARP. Her career has been dedicated to solving problems 
affecting economic and health security issues related to the 
aging population.
    Dr. Brigitte Madrian is the Aetna Professor of Public 
Policy and Corporate Management at the Harvard Kennedy School. 
Her research concentrates on behavioral economics and household 
finance, with a focus on household savings and investment 
behavior.
    We also have with us Ms. Cindy Hounsell--do you say ``Houn-
sell''?
    Ms. Hounsell. Houn-sell.
    Vice Chair Klobuchar. Ms. Hounsell is President of the 
Women's Institute for a Secure Retirement, which works to 
improve the opportunities for women to secure retirement 
income. She has served as a delegate for the last two White 
House Conferences on Aging, and the White House Social Security 
Conference.
    Ms. Rachel Greszler is a Senior Policy Analyst, Economics 
and Entitlements, at The Heritage Foundation's Center for Data 
Analysis. Before joining Heritage, she was Senior Economist at 
the Joint Economic Committee from 2006 to 2013. We always like 
when our alumns do well. Congratulations.
    As I have mentioned in my opening, we have seen real 
progress in the last 50 years in reducing the poverty rate 
among older Americans. Poverty among older men and women has 
fallen significantly since the mid-1960s when Medicare and 
Medicaid were created.
    In 1966, nearly a quarter of men 65 and over, and almost 
one-third of women 65 and older, lived in poverty. By 2012, the 
poverty rates for these same groups has fallen to 6.6 percent 
of men, and 11 percent of women.
    While there has been significant progress for both men and 
women, women still face, as you can see, a significantly higher 
poverty rate in their retirement. The poverty rate for women 75 
and older is twice that of men 75 and older. I don't think most 
people would guess that or realize it, but it is a fact.
    A major source of the progress on poverty, as you all know, 
has been Social Security. In 2012, Social Security alone lifted 
more than 15 million elderly Americans out of poverty. Without 
Social Security, the poverty rate for women 65 years or older 
would climb to 48.6 percent.
    In the coming years, we will be facing new demographic 
challenges. The Census Bureau says that between 2005 and 2030, 
the project that between those years the number of Americans 
age 65 and older will have doubled that.
    (A cellphone sounds.)
    Vice Chair Klobuchar. That was his siren call for the 
doubling of the population.
    [Laughter.]
    Representative Delaney. Sorry.
    Vice Chair Klobuchar. Between 65 and older. I no longer 
call it a ``silver tsunami.'' I know that has some bad 
connotations, so we will call it a ``silver sensation''--how's 
that?
    [Laughter.]
    We will put a positive spin on it. We are so glad that we 
have so many seniors that are doing better and living longer, 
but as we know with this rapidly growing population we need to 
ensure that both men and women can retire in peace and that 
most of our focus today is on how we close this gap for women 
and strengthen their retirement security.
    In April I released a report highlighting how women's lower 
wages not only affect their current financial security but also 
affect their retirement security. Women who work full-time earn 
about 80 cents for every $1 that men earn. Much of this 
disparity is due to differences in education and occupation, 
but even after accounting for those and other factors women 
still make less than men.
    The pay gap is even greater for older workers. Lower 
lifetime earnings translate to less money for retirement. 
Annual median income for women 65 and over is about $11,000 
less for men in the same age group--again, average, median 
income, annual, is about $11,000 less for women than it is for 
men.
    Retirement experts often talk about the three-legged stool: 
Social Security, employer retirement plans such as corporate or 
government pensions, and savings, personal savings such as 
IRAs.
    Women rely more on Social Security for their retirement 
income than men, but their benefits--because of the reasons I 
just discussed with their salaries--are lower than men. The 
average weekly Social Security benefit for female retirees is 
78 percent of what it is for male retirees.
    Women are also less likely to receive income from a 
traditional pension plan, and when they do their pension check 
is smaller. Women's median income from company or union 
pensions is 53 percent of men's median income from those 
sources.
    Lower earnings also affect the ability of women to 
contribute to retirement plans such as 401K, 403B, or Employee 
Stock Ownership Plans, or IRAs. In addition, because women live 
longer and are more likely to be single in retirement, they 
cannot rely on a spouse's income to supplement their own.
    In 2013, only 45 percent of women age 65 and over were 
married, compared to 71 percent of men--okay, that's the most 
interesting statistic of all. Preparing for a secure retirement 
is even more challenging because many women of the Baby Boomer 
Generation are also members of the so-called ``Sandwich 
Generation,'' one I was in for quite awhile where you have 
young kids and at the same time you have aging parents.
    Because of these care-giving responsibilities, women have 
12 fewer years in the paid workforce over their lifetimes, 
leading to lost wages, lower Social Security, and private 
pension losses as a result of their care-giving 
responsibilities.
    In addition to lost wages, family care-givers end up paying 
about $5,500 per year in out-of-pocket costs. To help support 
families who care for aging family members, I introduced the 
Americans Giving Care To Elders Act, or the AGE Act, with 
Senator Barbara Mikulski a few years back. And, while we are 
waiting for Congress to move on the issue of long-term care, I 
still think of it as the elephant in the room. As we grapple 
with our continuing debates about health care and the need to 
continue our work in that area, we cannot neglect this issue of 
long-term care.
    We should also strengthen Social Security, including 
raising the cap on taxable income. In my mind, currently all 
income above $117,000 is exempt from the Social Security 
Payroll Tax. Gradually raising this threshold, along with other 
reasonable reforms, could help ensure the solvency of Social 
Security but not impact current beneficiaries.
    We cannot concentrate solely on lifting women's income as 
they retire or are near retirement. We also need to ensure that 
women's earnings throughout their lives lay the groundwork for 
a secure retirement.
    I am going to turn this over to Congressman Hanna and just 
end by saying that we have made extraordinary progress in 
reducing poverty, but the reality and the focus of this hearing 
today is that women remain less financially secure--much less--
than men in their retirement years.
    Today's hearing can help us to uncover new ways to address 
this challenge.
    Congressman Hanna.
    Representative Hanna. Thank you.

      OPENING STATEMENT OF HON. RICHARD L. HANNA, A U.S. 
                  REPRESENTATIVE FROM NEW YORK

    Experience shows a strong economy is the foundation of a 
secure economy. Workers with good jobs and adequate savings are 
better prepared to enjoy their retirement years. Women tend to 
live longer than men so a strong and vibrant economy is even 
more critical to providing them with a secure retirement.
    Unfortunately, our sluggish economy and aging population 
threaten our Nation's future retirement security.
    As Chairman Brady has observed, America has fallen into a 
``growth gap.'' Our economy is growing at half the rate of 
previous recoveries. That means we are falling further behind 
in terms of jobs and income relative to where we need to be.
    Fewer jobs and less income mean Americans will be less 
prepared for retirement. Older workers who lose their jobs 
often retire before they are ready. That means lower Social 
Security benefits and less retirement savings. Spreading fewer 
resources over more years results in a less secure retirement.
    Our Nation's population is getting older. As the youngest 
Baby Boomers enter the retirement years, we will undergo a 
dramatic demographic shift. The ratio of workers to retirees 
will shift from roughly three-to-one to only two-to-one.
    This demographic shift will undermine the pay-as-you-go 
financing of Social Security and Medicare programs. As a 
result, neither program will be able to meet its promised 
benefits and obligations. Our continuing growth gap and looming 
entitlement crisis will adversely affect every American, but 
especially and particularly women and older women.
    Regrettably, women typically have lower lifetime earnings. 
However, have longer life expectancies than men. Women are also 
less likely to be covered by an employer pension program. As a 
result, they are at grater risk of falling into poverty during 
their retirement years.
    To improve the retirement security of women, we must 
understand the nature and extent of the problem.
    As we focus on the topic of today's hearing, we must not 
lose sight of the fact that a growing economy creates more 
jobs, higher wages, and greater retirement security for both 
men and women.
    Economic growth alone cannot provide a secure retirement or 
prevent the insolvency of our entitlement programs, but without 
more growth our task will be much, much harder.
    We have a distinguished panel with us today, including a 
former member of the Joint Economic Committee, Rachel Greszler. 
I look forward to hearing each of our witness's testimony, and 
I hope we gain important insights into this very critical and 
timely subject.
    Thank you.
    [The prepared statement of Representative Hanna appears in 
the Submissions for the Record on page 28.]
    Vice Chair Klobuchar. Thank you very much, Congressman 
Hanna.
    Dr. Whitman.

   STATEMENT OF DR. DEBRA WHITMAN, EXECUTIVE VICE PRESIDENT, 
 POLICY, STRATEGY AND INTERNATIONAL AFFAIRS, AARP, WASHINGTON, 
                               DC

    Dr. Whitman. Thank you so much, and good morning.
    On behalf of AARP's 37 million members and all Americans 
age 50 and over, I would like to thank Vice Chair Klobuchar for 
inviting me to testify, and for convening, along with 
Representative Hanna and the other members of the Joint 
Economic Committee, this important hearing on women's 
retirement security.
    I would also like to recognize and thank the AARP leaders 
and volunteers from our state offices who are here today on 
Capitol Hill to visit their Members of Congress.
    The dream of a financially secure retirement is often much 
harder to attain for women than it is for men. And if you think 
about the reality of most women's lives, the reasons are fairly 
straightforward. Women on average live almost three years 
longer than men, so they have more years of retirement to pay 
for, yet they typically reach their later years with less 
income and savings than men.
    Older women are more likely than men to end up alone. They 
are more likely to need long-term services and supports, and 
they often face greater health care costs. For all of these 
reasons, older women are more likely than men to live under the 
shadow of financial stress.
    They have greater risk than men of outlasting their 
savings, and they are far more likely than men to end up in 
poverty. In fact, in 2012 almost 17 percent of women 65 and 
older were poor compared to 12 percent of men, according to the 
Census Bureau's Supplemental Poverty Measure, which takes into 
account out-of-pocket health care spending.
    Before going further, it is important to make it clear that 
financial security among older women varies widely. Older 
African American and Hispanic women have poverty rates that are 
more than double that of older White women. Single older women 
are up to five times more likely to be poor than married older 
women. And as Vice Chair Klobuchar said, poverty rates also 
vary significantly by age.
    We know that disparities can take many forms. For example, 
women who lack education or belong to economically 
disadvantaged racial or ethnic groups have much shorter life 
expectancies than educated White women. And despite women's 
advances in the workplace, a great many still face obstacles to 
their financial well-being in old age.
    Because of care-giving responsibilities, both for their 
children and older family members, women are more likely than 
men to work part-time, to spend time outside the labor force, 
to pass up promotions, and to shorten their careers.
    We also know that women are more likely to work in jobs and 
industries that tend to offer lower pay and benefits. Yet, 
increases in longevity and rising health care costs are 
actually worsening the outlook for many older women.
    For these and other reasons, improving women's retirement 
security requires a multi-pronged strategy. And I will use the 
rest of my time to highlight key solutions.
    First of all, we need to keep Social Security strong. 
Currently, women's Social Security retirement benefits are 20 
percent lower on average than men's, and women are more likely 
to depend on them for the majority of their income. Its 
protections, including guaranteed benefits and cost-of-living 
adjustments, are critical for women.
    We urge more employers to offer retirement savings plans. 
Roughly one-in-two workers cannot set aside savings for 
retirement from their paycheck, so improving coverage is 
critical. That is why we support the Automatic IRA legislation 
which would provide an easy and low-cost way for workers to 
build nest eggs through payroll deduction.
    AARP also supports state efforts to offer work-and-save 
plans to private-sector employees who do not have access to 
retirement plans in their workplace. We also urge employers to 
adopt automatic enrollment in retirement savings plans, as well 
as automatic escalation of contributions. And workers should 
have the option of receiving their retirement benefits as 
lifetime income, which would help protect women from out-living 
their savings.
    Enhancing tax incentives to encourage more people to save 
for retirement is another key to the solution. This is 
especially true for low- and moderate-income workers, and an 
improved and strengthened savers credit is one way to achieve 
this goal. Working longer, for those who still can, can also 
improve their retirement security. We encourage employers to 
adopt policies such as flexible schedules that help older 
workers stay on the job.
    We support adequate funding of training and retraining 
programs to help older workers stay competitive. And, 
importantly, AARP supports bipartisan legislation to restore 
long-established protections against age discrimination in the 
workplace.
    As Representative Hanna said in his opening statement, 
economic growth is an important factor for retirement security. 
Women and men, for that matter, should have peace of mind about 
their financial security as they age. That is why AARP believes 
it is time for a national conversation on retirement security 
to consider responsible ways to achieve this goal for all 
Americans.
    Thank you.
    [The prepared statement of Dr. Debra Whitman appears in the 
Submissions for the Record on page 29.]
    Vice Chair Klobuchar. Thank you.
    Dr. Madrian.

 STATEMENT OF DR. BRIGITTE MADRIAN, AETNA PROFESSOR OF PUBLIC 
   POLICY AND CORPORATE MANAGEMENT, HARVARD KENNEDY SCHOOL, 
                         CAMBRIDGE, MA

    Dr. Madrian. Thank you for the opportunity to speak to you 
today and share my thoughts on how we can strengthen America's 
retirement savings system.
    In examining the retirement security of women in the U.S., 
there is both good news and bad news. Saving for retirement and 
then managing one's assets in retirement is one of the largest, 
if not the largest, financial task that any household will 
undertake.
    Yet, evidence on the financial capabilities of the U.S. 
population show that we as a nation are woefully unprepared for 
this task, and that women fare worse than men.
    Women have significantly lower scores than men on a simple 
five-question test designed to test knowledge of basic 
financial concepts such as inflation, compound interest, and 
the value of diversification. This is true for both married and 
single women. Interestingly, women are not much more likely to 
give incorrect answers than men; instead, they are much more 
likely to answer ``I don't know.''
    Women are also substantially more likely than men to report 
that it would be difficult for them to come up with $2,000 to 
meet an unexpected expense within the next 30 days--44 percent 
for women versus 34 percent for men. Women are also more likely 
than men to report difficulty paying bills than men--57 percent 
for women versus 47 percent for men.
    But as women approach retirement, some of this gap narrows. 
There is some evidence to suggest that married women become 
more financially literate as they age in response to the 
likelihood that they will outlive their husbands and need to 
assume sole management of the household finances.
    Planning for retirement is not an activity engaged in by 
the majority of either women or men. On the retirement planning 
front, there are no substantive differences by gender, with 43 
percent of both men and women having planned for retirement--
although a slightly higher fraction of men than women actually 
report having some retirement savings: 63 percent for men 
versus 58 percent for women.
    The fraction of the population working for an employer that 
sponsors a retirement plan is actually relatively similar for 
men and women, about half, according to a 2012 report by the 
Employee Benefit Research Institute.
    The fraction participating in an employer-sponsored savings 
plan is also similar for men and women. This latter finding is 
corroborated by a recent Vanguard report, ``How America Saves: 
2013'' which shows that differences in savings plan 
participation rates by gender are not sizeable when comparing 
all men and all women eligible to participate.
    In some years, women have a slightly higher participation 
rate than men, and in others men have a slightly higher 
participation rate than women.
    This apparent parity, however, fails to account for the 
fact that women earn less than men and that savings plan 
participation tends to increase with income.
    Conditional on income, women actually have substantially 
higher savings plan participation rates than men at all levels 
of income except for those earning more than $100,000 annually, 
where the participation rates are roughly equal.
    Similarly, women and men have roughly equal contribution 
rates overall, but conditional on the income women's 
contribution rates exceed those of men at all income levels. 
Women, however, are less likely to make the maximum possible 
contribution, or to make catch-up contributions to their plan 
if they are eligible.
    Women and men are equally likely to have taken a loan out 
against their savings plan balances, with about 20 percent 
having an outstanding loan. Although the average loan balance 
is lower in dollar terms for women than for men, loan value as 
a fraction of total assets is similar.
    This largely reflects the fact that women have lower 
balances against which to borrow. Because women have lower pay 
than men on average--a point that has already been noted 
several times--and also shorter job tenure, women tend to have 
account balances that are roughly one-third lower than their 
male counterparts.
    In employer-sponsored savings plans, the asset allocation 
of women and men is fairly similar. Women, however, report 
having less tolerance for risk, and there are some notable 
differences in the investing behavior of women and men outside 
the domain of employer-sponsored savings plans.
    In outside investment accounts, women are less likely than 
men to put their money in high-risk investments. But they are 
more patient and are less likely to trade in and out of stocks 
to time the market or in response to an investment doing worse 
than expected.
    Taking on less risk can reduce expected portfolio returns, 
but trading less implies lower trading costs and a lower 
likelihood of mistiming the market.
    My biggest concern for women is what happens in retirement. 
Women have longer life expectancies than men, and married women 
tend to be several years younger than their husbands, so the 
average married woman reaching retirement can expect to spend 
several years as a widow, and the average single woman reaching 
retirement will spend all of her retirement years that way.
    In the shift away from defined benefit and towards defined 
contribution retirement plans, the financial security of women 
in retirement will depend very much on how the wealth 
accumulated for retirement is managed.
    With a traditional defined benefit pension, the default 
payout for a married couple is a joint and survivor annuity. 
Anything else requires the affirmative consent of the spouse. 
But defined contribution assets are largely not annuitized in 
retirement, leaving women vulnerable if the assets are not 
managed to last for their longer life expectancies.
    The implications of the shift from a defined benefit to a 
defined contribution retirement system on the wellbeing of 
older workers has not received sufficient attention in either 
academic or policy circles.
    In conclusion, most of the problems with the retirement 
savings system in the U.S. are not unique to women. The 
problems of access to employer-sponsored savings plans are real 
for both men and women.
    On some measures, women do better than men: conditional on 
having access to a plan, they are more likely to participate 
and they contribute more.
    But on other measures, women do worse. They have lower 
account balances, largely driven by lower levels of tenure, and 
lower pay than their male counterparts--which represent more 
fundamental problems with the labor market. The biggest concern 
is the longevity risk that women will face in retirement. They 
have longer life expectancies than men, yet have saved less for 
themselves.
    [The prepared statement of Dr. Brigitte Madrian appears in 
the Submissions for the Record on page 41.]
    Vice Chair Klobuchar. Thank you so much.
    Ms. Hounsell.

 STATEMENT OF MS. CINDY HOUNSELL, PRESIDENT, WOMEN'S INSTITUTE 
            FOR A SECURE RETIREMENT, WASHINGTON, DC

    Ms. Hounsell. Good morning, Vice Chair Klobuchar and 
Representative Hanna, and Representative Delaney.
    I appreciate the opportunity to appear before you to 
discuss women's retirement security. I am President of the 
Women's Institute for A Secure Retirement. WISER is a nonprofit 
organization. Our primary mission is financial education/
capability--providing women with the crucial skills and 
information they need to avoid poverty in retirement.
    WISER operates the National Resource Center on Women and 
Retirement Planning under a cooperative agreement with the 
Administration on Aging. The Center's goal is to help low- and 
moderate-income women make the best decisions they can with the 
assets and income that they have.
    Retirement decisions are complicated and getting it wrong 
means a stronger likelihood of poverty in old age, and a 
stronger reliance on government programs.
    Women are at greater risk, as we have heard, but I would 
like to add one more statistic to this. And that is, that women 
need more retirement savings and assets, yet they have less. 
Studies have projected that women on average need to replace 
nearly 130 percent of their final pay at retirement due to 
their life expectancy.
    Many women also have uneven work histories due to time out 
of the workforce for family care-giving. The financial issues 
of family care-giving can jeopardize the long-term retirement 
security of women, and that will be the focus of the rest of 
what I am going to talk about.
    Women remain the Nation's primary care-givers, whether 
caring for children or older family members. As care-givers, 
women are at an even greater risk of experiencing financial 
setbacks.
    When a two-income couple has a family, it still remain 
largely the mother's responsibility to take care of the 
children. In the majority of cases where a family elder 
requires care, it is women who provide it. Nearly 66 million 
people provide elder care in this country, and 61 percent of 
them are women.
    Nearly 5.5 million women who provide such care have 
children under 16. The Pew Research Center did a profile of the 
sandwich generation, finding that of the adults who provide 
care and are also providing financial support to an aging 
parent and supporting a child, nearly a third were just able to 
meet their basic expenses; while 11 percent were not able to 
meet their basic expenses.
    Research indicates also that care-givers lose nearly 
$304,000 in wages, lost pensions, and reduced Social Security 
benefits. Care-givers pay an estimated $5,500 in out-of-pocket 
costs each year for the person to whom they provide this care. 
Many of these care-givers either stop saving for their own 
retirement or dip into their retirement savings.
    Another aspect of this is grandfamilies where grandparents 
who are near retirement are raising grandchildren. Almost 20 
percent of the 2.5 million grandparents who provide this type 
of care live in poverty.
    When women take time out of the workforce to care for their 
children or their elder family member, their future Social 
Security benefits take a hit. For each year a woman, or a man 
for that purpose, does not work for pay the Social Security 
Administration includes a zero into the benefit calculation. 
According to SSA and about 20 other researchers that I spoke to 
this past week, that number still holds up.
    Vice Chair Klobuchar. I am glad you prepared for this.
    Ms. Hounsell. New studies are coming out from everywhere, 
it seems. Adding up all of these factors, women are worried 
about their financial security in retirement and savings, and 
they are really worried. Almost every survey shows that it is 
at the top of their fears.
    And the end results of the whole of women's unique 
challenges is that when they hit their retirement years, they 
have 25 percent less retirement income. And as you have heard 
from everyone, it seems, twice the poverty rate of men. And 
that poverty rate jumps for single women and for single African 
American and Hispanic women.
    So the question people are always asking me is: Men have 
all these challenges; why women? The main reason we need to 
stay focused on women are the shear volume of the numbers.
    At age 65, there are over 6 million more women than men, 
and the expected growth in the population of the oldest old is 
expected to grow. Recently the National Institute on Aging 
redefined this age group, ``85-plus'' and they changed it to 
``Ages 90 and Older.''
    Estimates indicate these numbers will greatly increase as 
the Boomer population reaches very old age. By 2050, the number 
of nonagenarians will make up more than 10 percent of the 
population. The oldest-old population is mainly made up of 
women who live alone--24 men for 100 women.
    So in the interest of time, I will just talk very quickly 
about four solutions that I think would actually help change 
the landscape. And that is:
    Shoring up Social Security, doing what we need to do to 
make the program secure for everyone.
    The private retirement system, especially because of the 
economy, we need to extend all those opportunities for people 
to save to part-time and temporary workers, of which there are 
many more people working in that manner.
    Then there is the role of lifetime income products like 
immediate annuities and longevity insurance. And these are 
little understood, but they actually could play an important 
role in providing future retirement security for women.
    And then care-giver credits. It is one of those things that 
has been talked about for decades. Study after study has looked 
at how the credit would work. And I think maybe its time has 
come. We certainly have the population that would be interested 
in such a policy option.
    And finally, I would just like to say that while there are 
endless discussions about a correct solution, millions of 
Americans are just trying to achieve financial stability and 
protect their future.
    Thank you.
    [The prepared statement of Ms. Cindy Hounsell appears in 
the Submissions for the Record on page 46.]
    Vice Chair Klobuchar. Thank you very much.
    Ms. Greszler.

STATEMENT OF RACHEL GRESZLER, SENIOR POLICY ANALYST, ECONOMICS 
   AND ENTITLEMENTS, CENTER FOR DATA ANALYSIS, THE HERITAGE 
                   FOUNDATION, WASHINGTON, DC

    Ms. Greszler. Thank you for the opportunity to come here 
today and testify.
    I would like to start by just saying that the views I 
express are my own and do not necessarily represent those of 
the Heritage Foundation.
    I would like to focus my remarks on three considerations:
    First, the challenges that younger women will face are 
likely to be different than those of current women retirees. 
Women have made substantial gains in education, income, and 
employment that will make them more secure in retirement; but 
younger generations will have to grapple with unsustainable 
entitlement problems, the massive federal debt, and a decline 
in marriage, all of which will create new challenges. Policies 
aimed at improving women's retirement security must take these 
changes into account.
    Second, policymakers should focus on reforming Social 
Security and enabling greater personal savings to help improve 
women's retirement security.
    And third, most importantly, a strong economy is the 
foundation for retirement security for men and women alike. 
Without a job and rising income, individuals cannot adequately 
save for retirement. In this area, the government can do more 
by doing less.
    Among the challenges that women face in retirement is 
longer life expectancies, and historically they have earned 
less and worked less than men, and have also not had as much 
access to participation in employer-sponsored retirement plans.
    Fortunately, women have made substantial gains in these 
areas. Women now earn more college and graduate degrees than 
men. Their incomes are rising compared to men, and they have 
equal access to and participation in employment-sponsored 
retirement plans.
    While these gains will make women more secure in 
retirement, the daunting fiscal outlook will bring unique 
challenges. Defined benefit pensions are dwindling, and Social 
Security is massively underfunded.
    Social Security must be reformed, beginning with common-
sense proposals to preserve its solvency such as indexing the 
retirement age to life expectancy, and implementing the more 
accurate changed CPI.
    Additionally, Social Security spousal benefit should be 
replaced with an earnings credit for parents who take time out 
of the labor force to raise children, and also a payroll tax 
credit for parents who continue to work while raising children.
    One of Social Security's shortfalls is that it fails to 
keep some people out of poverty while providing the largest 
benefits to the wealthiest retirees. A flat benefit above the 
poverty level, and phased out for higher income earners, would 
improve Social Security retirement and would also minimize the 
resources extracted from the private sector.
    And finally, Social Security should end its practice of 
penalizing individuals who work longer. Both the earnings test 
and payroll tax contributions for those who work beyond the 
normal retirement age should be eliminated.
    In addition to Social Security reform, there are a number 
of ways the government can help enable greater personal 
savings. About 75 million employees, many of whom are self-
employed and work for small businesses, do not have access to 
an employer-sponsored retirement plan. And among those who do 
have access, about 15 percent choose not to save.
    The Automatic IRA proposal would increase access and 
enrollment in retirement savings plans. Under the Automatic 
IRA, employers would gain access to low or no-cost retirement 
plans, and automatic enrollment of their employees would 
increase participation.
    This leaves the most important consideration for retirement 
security: a strong and growing economy. Regardless of age or 
gender, a strong and growing economy is fundamental to a secure 
retirement. It may seem obvious, but a study by the Center for 
Retirement Security found that the biggest determinant of 
retirement savings was employment.
    More than one-half of low-income older individuals surveyed 
were not employed. Without a job, it is nearly impossible to 
save for retirement.
    Today's employment market is weak. Although the 
unemployment rate has declined, much of that has been caused by 
workers dropping out of the labor force. While labor force 
participation is already near a 35-year low, policies such as 
the Affordable Care Act are projected to reduce employment by 
about 2.5 million in 2024.
    Lower employment means less retirement security. Sound 
fiscal and economic policies can spur job creation. Budgetary 
discipline would reduce fears of future tax hikes, encourage 
employers and entrepreneurs to expand operations, and repeal or 
reform of harmful regulations would reduce employers' cost of 
hiring workers.
    In conclusion, it is important that policymakers consider 
proposals that will help both current and future generations of 
women retirees. This includes Social Security reform, as well 
as increasing personal savings.
    But the single greatest thing the government can do to 
improve both men's and women's retirement security is to foster 
a strong and growing economy.
    Thank you.
    [The prepared statement of Ms. Rachel Greszler appears in 
the Submissions for the Record on page 55.]
    Vice Chair Klobuchar. Thank you, very much.
    Thanks to all of you. I am going to turn over my first 
round here to Congressman Delaney, and then we will go to 
Congressman Hanna. And then I will ask questions.
    Representative Delaney. Thank you, Vice Chair Klobuchar, 
and thank you for organizing this hearing. This is an 
incredibly important topic, and I think it is really important 
to shine a spotlight on this topic because I think what has 
happened to women--we are thinking about this in the context of 
retirement, but it is really just kind of a manifestation of 
the injustices that women have dealt with their whole 
professional careers, and the additional burdens that women 
have had to bear in our society which in my opinion has been 
inequitable as it relates to women.
    And now they are bearing an additional burden in 
retirement. So we have a series of, in my opinion, unfair and 
inequitable burdens that women have borne, and now we just have 
another example of it in retirement.
    And I worry that it is still going on.
    Ms. Greszler, you spoke about how more women are graduating 
from college and have advanced degrees than men, and I think 
last year it was 54 percent of college graduates were women and 
58 percent of advanced degree graduates were women.
    Yet, when you look at what is happening in corporate 
America when men and women are up for promotions to the level 
of vice president or manager, only 25 percent of those 
promotions go to women. And when they are up for promotions to 
the C Suite--in other words, the most senior executives of a 
company--only 13 percent of those promotions are going to 
women.
    So it seems to me this inequitable behavior continues and 
persists, despite many of the gains that we talk about. What is 
your view as to why, despite the fact that--more than half of 
the graduates are women, and probably more than half of the new 
hires at companies are women, why do you think we are seeing 
such talent drain among women in the senior ranks? Which to me 
is a tragedy for our society because to not have half the 
population represented in the most senior policymaking 
positions in corporate America--forget about the fact that it 
is bad for women, which it is; it is bad for society--
particularly in my own view, and this is just my own personal 
view, if you look at the skills men and women generally 
speaking have, the skills that women have in my opinion: better 
judgment, a better spirit of cooperation, and quite frankly 
better cognitive abilities--I have four daughters so I may be 
biased on this--I think society is losing a lot there.
    So why do you think it is continuing to happen?
    Ms. Greszler. I think one of the first factors is that if 
you look at what women are earning more college and graduate 
degrees in, a lot of those degrees are not in the highest 
paying fields of science, technology, engineering, and 
mathematics. So that plays a certain role.
    As far as the promotions within the workplace, I think we 
need to encourage women to not take themselves out of the 
running. Perhaps they think they are going to have a family 
soon, and they don't know what that is going to look like, and 
so they kind of step back and do not promote themselves as they 
would. Also, women are less likely to ask for a pay increase 
and a promotion. And so we need to encourage women, and we do 
not want to make them believe these statistics of oh, you are 
just going to earn less than men so just take yourself out of 
the running, or do not push for that. That should not be a 
given.
    You know, we should be encouraging that. And one policy I 
would like to caution against, particularly as a working mom 
with four young kids, is the Paycheck Fairness Act. I just fear 
that this would reduce opportunities for women, instead of 
enabling them. We can celebrate the gains that women have made 
over the past decades. They now have greater access to 
flexibilities and accommodations in the workplace, and I just 
think that policies like this could create one-size-fits-all 
jobs that match one-size-fits-all pay scales.
    Representative Delaney. I appreciate your comments. I think 
we need those policies, quite frankly, based on some of the 
statistics.
    But switching to the other panelists for a second, so we 
have talked about things to do. And they are, I would call 
them, policies that I think will benefit both women and men in 
retirement, right? Strengthening our important safety net 
programs, social insurance programs like Social Security, 
encouraging more personal retirement. And then we have the 
whole portfolio of things around workplace fairness and 
equality, which I touched on, which is worthy of its own 
discussion, in my opinion, but staying with retirement for a 
second, what are the specific things--laser-like focused things 
we can do to help women specifically with this retirement 
situation, which again the statistics are really tragic and in 
my opinion very unfair. What can we do to help women's issues 
in this narrow area of retirement security, specifically for 
women, as opposed to things that help both men and women.
    Dr. Whitman.
    Dr. Whitman. Women, as we know, are the primary care-givers 
of both children and older adults, and the number of older 
adults needing care is going to grow exponentially as the 
population ages.
    So it is really important that employers have flexible work 
schedules and; other accommodations that allow women to stay 
attached to the labor force. Because if a woman quits her job 
to care for a loved one, often she loses hundreds of thousands 
of dollars in retirement security for her own future.
    So we need to buck that up. We also need to help women and 
men remain in the labor force longer, if they are physically 
able to do so. And that includes ways to end age 
discrimination, ways to help people maintain their skills and 
training, and ways to help the long-term unemployed who are 
most likely to be older workers. All of those can have a really 
big impact on retirement security for women.
    Representative Delaney. So it sounds like this care-giver 
policy to bolster and support care-givers really will help 
women materially. Thank you.
    I don't know, am I out of time?
    Vice Chair Klobuchar. If you want to ask another question--
--
    Representative Delaney. Well I think Ms. Hounsell, did you 
have a comment?
    Ms. Hounsell. I was just going to say that I think the 
population that I was talking about, what they are going to 
need, and other countries are considering this, is maybe a 
benefit when you reach that oldest old age, 85 or 90, that that 
will keep the worst from happening.
    Representative Delaney. So just kind of a top-off benefit 
maybe for the people who hit that. Because they are exceeding 
any probably modeled expectations for their savings, et cetera, 
kind of like a way out of the money insurance plan.
    Ms. Hounsell. Right.
    Representative Delaney. Dr. Madrian.
    Dr. Madrian. I think another policy that would be worth 
looking into is thinking about ways to promote the 
annuitization of defined contribution assets.
    Representative Delaney. Right.
    Dr. Madrian. A traditional pension gives you a monthly 
paycheck every year until you die----
    Representative Delaney. Right.
    Dr. Madrian [continuing]. But traditional pensions are 
increasingly only available to workers in the public sector. 
And everyone else is left with a defined contribution 401K-like 
pension plan; where annuitization is not typically a built-in 
feature of such plans.
    Representative Delaney. Right.
    Dr. Madrian. And women would really benefit from this for 
two reasons. Number one, longer life expectancy, and number two 
is: As individuals get older, half of them are going to start 
having diminished--diminished mental capabilities to manage 
their own assets----
    Representative Delaney. Right.
    Dr. Madrian [continuing]. And those are the people who end 
up being victims of financial fraud. And annuitization can help 
solve both of those problems at the same time.
    Representative Delaney. So supporting care-givers, some 
kind of secondary program that maybe kicks in when someone has 
reached a particularly kind of elderly phase, and then this 
swap concept of defined contribution programs where they could 
be swapped more freely and transparently to annuity programs. 
Those are all three very good ideas. Thank you.
    Vice Chair Klobuchar. Thank you, very much. Congressman 
Hanna.
    Representative Hanna. Thank you. My goodness, what an 
important subject. I am struck by a number of comments, and I 
really appreciate the opportunity to hear a little bit of back-
and-forth.
    Ms. Greszler, to Ms. Whitman, you talked about Social 
Security to flat means-tested benefits. I am curious how you 
and your organization feel about that, Dr. Whitman?
    Dr. Whitman. Thank you for the question, Representative 
Hanna. Obviously AARP feels very strongly that we need to put 
Social Security on solid footing for the future so that people 
can depend on it--not only for the current generation, but also 
for future generations.
    So getting it financially healthy is really, really 
important. And I think there are a variety of ways to do that.
    Representative Hanna. But to the specific point of Ms. 
Greszler, in terms of means testing?
    Dr. Whitman. We have concerns in that everybody pays in at 
different rates, and we want to maintain at least some link 
between the contributions that people pay over time and the 
benefits that they receive.
    Representative Hanna. Even though the means testing would 
ultimately make it more secure, I suppose, for everyone?
    Ms. Greszler. The way in which I would support a means-
tested benefit is through elimination of the payroll tax, with 
comprehensive tax reform, so it would no longer be a 
contributory system.
    I think this would bring us closer to Social Security's 
original intent of protecting seniors against poverty in old 
age. As it is, it is providing pretty substantial benefits to a 
lot of people who do not need them at all and, you know, 
extracting more taxes over everybody's lifetime in order to do 
that.
    We could better focus it through a flat poverty-level 
benefit that was the same for everybody. And for seniors who 
had significant non-Social Security income, that benefit would 
be phased out and in return they would pay lower taxes over 
their lifetime.
    Representative Hanna. Do any of you feel as though we have 
gone through this--we talk about the sandwich generation, but 
there is a huge population who simply did not plan for 
retirement, and the advent of things like 401Ks, and vestiges 
programs that require you to work, in my view, much longer than 
you should have to be a vested person. It seems if you earn 
that money, you should get that money, and it should travel 
with you and maybe become a part of your 401K.
    The idea that people are just now understanding the value 
of saving early, saving even as a child, a youth IRA type of 
thing would be beneficial because of the time value of money 
which Rockefeller so rightly pointed out.
    So that the 130 percent of income that you need to retire 
with that Dr. Madrian, you mentioned, I think you mentioned 
that, that that seems like an impossibility with very low 
interest rates that we see today, coupled with, even though the 
stock market is doing well, you know, we have also seen long 
periods where it hasn't. We see underfunded pension programs. 
We see defined benefit programs with a lot of public employees, 
but somewhat less historically--although about half--where they 
are about the same rate as they have historically been but 
somewhat less.
    All of that adds up to a very unprepared population of 
people, knowing that women live longer. This seems to me to be 
a real crisis, not just something that's--I know it's going on 
every day. I know I am blessed I can help with my own family, 
but so many people can't.
    What do you see with AARP? I am thinking about women in 
poverty, and what is the percentage of people out there who 
rely on Social Security for up to 90 percent of their income? 
Do you know that?
    Dr. Whitman. I can get it pretty quickly. But you're right, 
the fact that most people do not have an adequate nest egg 
means that the vast majority, and particularly older women as 
Dr. Madrian mentioned, are much more reliant on Social 
Security.
    We need to get more people saving. Half the population 
cannot do it in an easy way through payroll deductions, as 
several on the panel have said. That is why we need to look at 
ways to encourage employers to offer retirement plans, be it 
through Auto IRA or, through the many states that are looking 
at work and save programs.
    But the specific number is, without Social Security 
benefits almost half of older women would be in poverty.
    Representative Hanna. Half?
    Dr. Whitman. Half. 48.5 percent.
    Representative Hanna. And with Social Security benefits?
    Dr. Whitman. With Social Security benefits, it is down to 
17 percent, I believe.
    Representative Hanna. My time has expired. Thank you.
    Vice Chair Klobuchar. Okay, very good. Representative 
Maloney has joined us.
    Representative Maloney. Thank you so much for focusing on 
this important issue. I had two other hearings at the same time 
with votes, and I look forward to reading your comments in the 
transcript of this important hearing.
    I really want to thank Vice Chair Klobuchar for bringing 
our attention to this important issue. I find too often women's 
issues are swept under the carpet, or ignored, or not paid any 
attention to at all, and that is why we have still 77 cents to 
the dollar in pay inequity, which has been stuck for well over 
three decades.
    In 2010 when I had the great honor of chairing this 
Committee, I also honed in on some of these issues. And our 
staff report back then underscored the severe gap in retirement 
savings between men and women.
    One thing that I find particularly disturbing, and I would 
like to ask any member of the panel to comment on it, is that 
all of these positions, whether it is 77 cents to the dollar, 
or your IRA account, or your Social Security, all of these 
financial things for which we are underpaid, or not paid as 
much, ends up in making, at the time that report said the 
largest segment of people living in poverty were older women. 
And I want to know if that is still the case, and why? Why do 
you think that is?
    But furthermore, if you could comment on the 401K plan. In 
2004 the median female worker approached retirement with 
$34,000 less than half of what her male counterpart had. And I 
am glad that the Committee and the Congress continue to examine 
this critical issue and look for ways to help Americans to 
prepare for retirement.
    In my home City, a recent survey by our comptroller found 
that two-thirds of working adults are not enrolled in employer-
sponsored retirement plans largely because many employers do 
not offer these plans. And as a result, more than half of more 
and more Americans are approaching retirement age without any 
savings. And as we have seen here today, far, far too many of 
them are widowed and single women.
    The fact is that women live longer than men. Today a woman 
who reaches 65 can expect to live another 20 years. Yet, for 
many this prospect is a very fearful one, that they will 
outlive their retirement savings. And as Dr. Whitman in your 
prepared remarks testified, women incur greater health care 
expenses, and need expensive long-term support and care into 
older age. And I would just like to inject right now, with my 
colleagues, one of the great things about the Affordable Care 
Act is that women are no longer discriminated or denied 
insurance because they are pregnant or because they are female.
    So my basic questions are:
    What are the best steps we can take in Congress--and I open 
it up to everyone on the panel--to encourage employers to offer 
retirement savings plans so that workers are better prepared 
when they leave the workforce?
    And also, how would President Obama's IRA proposal help 
women prepare for retirement, particularly those with low wage 
and part-time jobs?
    And also, if you could comment on the contributing factors 
that make women the poorest, single, older women, the poorest 
members of our society? What a statement that is, a very 
disturbing statement to me.
    In any event, I want to thank you all for being here, for 
your testimony, and for focusing some of your life's work on 
helping other women. As Madeleine Albright used to say, there's 
a very special place in hell for women who do not help other 
women, and I am very pleased that our Vice Chairwoman is one of 
the leading women in the United States in making sure that 
these issues are front----
    Vice Chair Klobuchar. And not in hell right now.
    [Laughter.]
    But thank you.
    Representative Maloney. Thank you for focusing on this. I 
think it is important, and I yield back and look forward to 
your answers.
    Dr. Madrian. So I can speak to one of your questions, which 
was how the 401K system, or the private retirement savings 
system, impacts women.
    I think the answer there is that the system itself is 
pretty neutral. Women and men are facing the same barriers to 
access, and conditional having access, women actually are more 
likely to save. The biggest problem is, their pay is lower than 
men. So even if they are more likely to participate and 
contribute more, it is not enough to compensate for the fact 
that they are actually being paid less than men.
    And then those lower assets have to stretch out over a 
longer period of time in retirement. So it is not surprising 
that if you are taking less money and it has to last longer, 
that women are then more likely to end up in poverty.
    Representative Maloney. And then this lower pay also 
translates itself into lower Social Security payments, and also 
the issue of should women who stay at home get some type of 
compensation in their Social Security for the work that they 
are doing for the overall family.
    I think another dynamic that is very important is that so 
many women are working, and that so many families--spouses, 
males and their children--are dependent on the income of the 
wife, or the spouse in this particular case. And that is 
another dynamic that is taking place in our society and 
impacting families overall.
    So thank you so much. Yes, Dr. Whitman.
    Dr. Whitman. I don't know if women helping women, or 
working on women's issues gets us to Heaven, but I appreciate 
your earlier comment.
    [Laughter.]
    I think the main problem with the retirement savings system 
can be summarized this way: Half of the population does not 
have the ability to save from every paycheck. Roughly half the 
population has no financial incentives through the tax system 
to save, and therefore roughly half the population when they 
reach close to retirement age has almost nothing saved.
    And I think we really need to look at ways to enable more 
people to save through their workplace, provide more people 
incentives to save either through employer matches or, through 
adding to our tax code, refundable savers' credit. All of these 
can really help people as they age, because as we know, the 
defined contribution system is one of the predominant ways that 
people have assets that they can live on in retirement.
    Ms. Hounsell. I wanted to just say something about all the 
women that work part-time, because twice as many women as men 
work part-time, and they also do not have access to savings 
even if they work someplace where there is a retirement 
account.
    Representative Maloney. Thank you.
    Vice Chair Klobuchar. All right. Well thank you.
    I want to start where Representative Maloney ended and 
where you were just seizing on this about the issue of the 
retirement accounts and what we can do.
    And I know you, Dr. Madrian, have done a lot of work in 
that area as well. So why don't we just start there. You have 
done a lot of research on this. Let's start with a business 
setting where they actually have 401K plans or something like 
that. Does anyone know how many, what percentage of women have 
access to that?
    Dr. Madrian. So it is about half of the workforce overall, 
women and men, are in jobs that have a pension plan.
    Vice Chair Klobuchar. So what can we do to make it easier 
for them to save, and get them to do it? Because sometimes I 
have had some younger employees that kind of pride themselves 
for not putting money away in it, and we keep trying to tell 
them they should. But anyway, so tell me what we can do.
    Dr. Madrian. We know the answer to that question. The 
single most effective way to get people to save for retirement 
is through automatic enrollment. Automatically enroll them in a 
savings plan. And if they do not want to save, require them to 
opt out.
    Plans that have automatic enrollment have savings plan 
participation rates ranging between 80 and 95 percent of 
employees.
    Vice Chair Klobuchar. Do you know how many plans have that 
automatic enrollment?
    Dr. Madrian. So automatic enrollment has been diffusing 
rapidly over the last several years among large employers. It 
is high, probably about 60 percent of workers in very large 
companies are at firms that have automatic enrollment. Small 
employers have been less likely to jump on the automatic 
enrollment bandwagon.
    Vice Chair Klobuchar. Do you think part of that--I mean, I 
am sure part of it is trying to respect employee choice, but is 
part of it then if people do not enroll they do not have to do 
the matching funds? I am trying to figure out the motivation.
    Dr. Madrian. That is certainly something you hear from some 
employers, yes.
    Vice Chair Klobuchar. And so I know there have been 
attempts in Congress to make it mandatory-opt-out--is that how 
you call it?
    Dr. Madrian. Yes.
    Vice Chair Klobuchar. Do you think that would be helpful?
    Dr. Madrian. Oh, it would certainly help. I mean you might 
get some political opposition from some quarters----
    Vice Chair Klobuchar. Oh, really?
    [Laughter.]
    Dr. Madrian [continuing]. But it would help. We would be in 
good company. The UK has recently enacted a pension reform, 
doing this mandatory automatic enrollment. New Zealand has had 
this for several years. So, you know, it is the way other 
countries are going, and I think it is something worth thinking 
about.
    Vice Chair Klobuchar. Are there other countries besides 
just those two that are doing it?
    Dr. Madrian. Well some have mandatory enrollment, like 
Singapore or Australia.
    Vice Chair Klobuchar. But we would be looking more at opt-
out.
    Dr. Madrian. I would guess that would be more politically 
palatable.
    Vice Chair Klobuchar. Right. What other things can we do, 
short of that?
    Dr. Madrian. Well, so I think the next thing is expanding 
access. So half the workforce is in a firm that offers a 
savings plan. So the real battle line is how do you get the 
other half of the workforce able to save for retirement, 
because payroll deduction is the single most effective way.
    And most of those workers are either part-time, as Cindy 
pointed out, or they are working for smaller firms that do not 
offer a savings plan. And for smaller firms, a lot of those 
companies have the same challenge as individual retirees.
    Joe's Pizza--Joe who owns Joe's Pizza on the corner--you 
know, probably does not have an MBA. He does not have a 
dedicated human resources staff that is trying to figure out 
optimal benefits packages for his employees. He has got all the 
challenges of the average investor.
    So we need a simple way for employees who are working part-
time, or working for small firms that do not have a savings 
plan, to save for retirement, either by having simple plans for 
those firms to offer, or by having an alternative that does not 
rely on the employer-sponsored savings plan, like a MYIRA or an 
automatic enrollment IRA product, or something like that.
    Vice Chair Klobuchar. Um-hmm. Okay. Anyone want to add to 
those ideas? This is the idea of opt-out requirement, and then 
also which would have to be legislatively mandated, I think. 
And then this idea for people who do not have access to find 
some new vehicles to do that.
    Dr. Whitman. I would also have employers use auto-
escalation mechanisms, so that maybe they enroll you 
automatically at a low savings level, and then you have the 
opportunity to save a little bit of your income more each year.
    This is what I used to tell my colleagues who would ask me 
for retirement advice. If you can save a piece of every raise 
you get, or take a piece of every cost-of-living increase and 
add that to your retirement savings, your contributions grow 
over time, and it can make a huge difference in your lifetime 
savings. And some employers are also looking at that, as well.
    Vice Chair Klobuchar. Okay.
    Ms. Greszler. I would just reiterate that automatic IRA 
because it captures both the increased access and the increased 
enrollment. It is something that would be easy for small 
employers that don't have the time, the education, or the 
resources necessary to go out into the private sector and pick 
a plan, and pay for all of that.
    It would help those to be able to go there and get these 
plans. All they would have to do is to deduct it from their 
employee's pay with little to no cost for them. And if they did 
this through automatic enrollment, you significantly increase 
participation rates. So I think the automatic IRA could go a 
long way.
    Vice Chair Klobuchar. What do you guys think about that?
    Dr. Whitman. AARP supports the Automatic IRA, as well as 
other state-based programs that are trying to help more people 
to save for retirement.
    Vice Chair Klobuchar. Okay. Anything more? Do you want to 
add anything, Ms. Hounsell?
    Ms. Hounsell. I think the MYIRA is a great proposal. It's 
just that it's not expansive enough yet. And if that would be 
available to small business owners, or individuals, that would 
be a great opportunity for people.
    Vice Chair Klobuchar. Okay, very good.
    Then we are talking about another thing we can do here to 
shore up Social Security. Does someone want to walk into that? 
Dr. Whitman?
    Dr. Whitman. Absolutely. We believe that we do need to 
shore up Social Security, not just for the current generation 
of retirees but for future generations.
    If we look at the middle class in the future, they are 
going to need Social Security even more than today's retirees, 
largely because of the decline in defined benefit pensions and 
rising health care costs. So we absolutely must find a balanced 
solution to make sure that the program exists and is 
sustainable over the long term.
    Vice Chair Klobuchar. Very good.
    Dr. Madrian. We know how to solve the problems with Social 
Security from an economic standpoint. The biggest problem is 
the political will to do it.
    So the way to restore sustainability to the Social Security 
system are a modest increase in taxes, a modest decrease in 
benefits--and that would be done in such a way that the burden 
falls most heavily on those who are receiving the highest level 
of benefits--and increase the retirement age.
    And if we do all of those in small measures, and we do it 
today, then we can do them in small measures. And if we put it 
off, kick the can down the road for 20 years, then we are going 
to have to take much bigger steps and it is going to be much 
more painful politically and economically.
    Vice Chair Klobuchar. Okay.
    Ms. Hounsell.
    Ms. Hounsell. Ditto.
    Vice Chair Klobuchar. Ditto? Okay. Good.
    Ms. Greszler.
    Ms. Greszler. Within Social Security, I would just say that 
we need to focus any changes. We want to target those who are 
actually living in poverty. That is what the program was meant 
to protect against. And so if we are going to consider things 
like higher benefit levels as people age because they tend to 
have higher needs when they are older, it is not really the 
fact that they are older which makes them more susceptible to 
poverty; there are plenty of older people who are 90 years old 
and may be very wealthy. We need to be targeting the income 
level. That is what they need income for. And so I would 
caution against anything that says we are going to have a 
different measure of inflation, or something like that, for 
people once they hit 80 or 85 or 90. We need to target income 
so that Social Security can truly protect against poverty.
    Vice Chair Klobuchar. Another thing we talked about was 
care-givers. We have gone through now Social Security. I think 
there is general agreement that we--probably disagreement on 
how to do it, but that we need to make it as strong as 
possible. But we have got to make it easier for people to get 
access to retirement plans on their own.
    But also if they are in the workplace, to maybe require 
them, or try to get them to do it, make it easier for them, we 
will put it that way.
    And then the other thing we have talked about is this 
particular strain on women for the most part, women who are 
care-givers to their kids and to their aging parents, and this 
whole long-term care issue.
    Any ideas there? And do you think Congress should start 
looking at this more seriously? Dr. Whitman?
    Dr. Whitman. Yes, please. This is a critical issue, 
especially for women. And I think you are right. It interacts 
greatly with their ability to save and to have a secure 
retirement.
    If they have to take time out of the workforce and go into 
part-time work or, tap their IRAs in order to pay to take care 
of a loved one, that puts their own financial security at risk.
    And right now we have very little support for people who 
need long-term services and supports, other than through the 
Medicaid program. While there are some states--and Minnesota is 
a shining example in this country of a state that is using its 
long-term services and support to deliver good quality care--we 
absolutely need to do more to help people finance long-term 
care costs that can be in the hundreds of thousands of dollars.
    Vice Chair Klobuchar. Very good. Anyone else want to add 
anything more to that?
    Ms. Greszler. I think that we all support child care/care-
giver credit. I would just also like to say that we do not want 
to do anything that is going to penalize the women who do take 
time out of the labor force to care for children or for older 
people from being able to come back into the labor force.
    And so as I mentioned before, if you have one-size-fits-all 
pay scales, and one-size-fits-all jobs, women are not going to 
be able to have the flexibility that might let them stay in the 
labor force while caring for somebody else. And then if they do 
take the time out, they are not going to be as likely to be 
rehired if the employers must pay one wage, just depending on 
what the title of the job is. They are going to be less likely 
to hire women who come in from time out of the labor force that 
men would be in otherwise.
    Vice Chair Klobuchar. Very good.
    Ms. Hounsell. I think the care-giver credit is much more 
important than the child-care credit.
    Vice Chair Klobuchar. Okay. Right. Good. Well I have some 
follow-ups that I think I will put in writing.
    Vice Chair Klobuchar. Among other things, I have to 
question my classmate from law school who happens to be the FBI 
Director on the Judiciary Committee next. But I want to thank 
you all for coming, and I really think this has been helpful.
    I think usually you have these hearings and the statistics 
kind of roll over you, but I think these statistics are pretty 
mind boggling in terms of women as they are aging and living 
longer and just how they are going to be able to support 
themselves. And it really is a cry for strengthening Social 
Security moving forward and looking at the long-haul, and then 
also really trying to get into some of these retirement options 
and how we can strengthen them as well.
    I really appreciate the civility of this hearing, and the 
tone, and how you guys clearly have looked at each other's 
work, or talked ahead of time, which I also appreciate, and 
know what each other's positions are. That has been very 
helpful as well.
    Do you want to add anything, Mr. Hanna?
    Representative Hanna. Do you mind if I ask some questions?
    Vice Chair Klobuchar. Oh, not at all. No, no.
    Representative Hanna. I am curious, Dr. Madrian, did you 
look at the current load of college debt? Has anybody 
considered that in terms of our ability to save? You know, the 
incomes we have not seen the growth, with college we have seen 
enormous growth. That is going to affect the dynamic of all of 
this.
    The other thing I wanted to ask you, Dr. Madrian, is we 
talk about increasing the retirement age. And I was in an 
industry that, you know, at 55 years old in the type of work I 
was in, heavy construction, at 60, increasing the retirement 
age is just not a practical thing for so many hundreds of 
thousands of people in this country. How do you manage that, 
knowing that maybe that is something we need to talk 
thoughtfully about, with all the different dynamics of all the 
different types of employment out there?
    Vice Chair Klobuchar. Before you answer it, I am going to 
turn this over to Congressman Delaney to close this out, but 
again I wanted to thank our witnesses. I have to go to 
Judiciary, but it was a very good hearing and I hope some good 
legislative ideas will come out of it. Thank you.
    Representative Hanna. Thank you for indulging me.
    Dr. Madrian. So to answer the first part of your question, 
I am not aware of any research--and I certainly have not 
conducted any--that tries to make a link between college debt 
when individuals are entering the workforce and their 
subsequent retirement savings. But I certainly think it stands 
to reason that if you have got to pay a lot of money to pay off 
your student loan, you are going to have less money to 
contribute to a savings account and to accumulate retirement 
savings.
    And we know that starting early is the best way to save for 
retirement because of the power of compound--because of the 
power of compound interest. And I just blanked on your second 
question.
    Representative Hanna. Oh, different----
    Dr. Madrian. The retirement age, yes. Absolutely.
    Representative Hanna [continuing]. Things people do for a 
living directly affects your ability to work less or more.
    Dr. Madrian. Yes.
    Representative Hanna. I was in heavy construction. I know 
masons that, and laborers, and carpenters, who at 55 years old 
simply cannot compete in their trade. And they certainly should 
not have to move into some menial labor to survive. It just 
does not seem----
    Dr. Madrian. The fact of the matter is, to make the system 
sustainable if you are going to allow people to retire at 55, 
you are going to have to have----
    Representative Hanna. Well, no. I mean how do you manage 
that within all of that?
    Dr. Madrian. Higher taxes. I think the way you manage it is 
to think of some--to help workers with a transition strategy 
from those jobs, those more physically demanding jobs that they 
may not be able to handle once they get to a certain age.
    Representative Hanna. So the bottom line is, growing our 
economy, getting people better wages, learning to save earlier, 
more, and having a target like you talked about, education, all 
of that, is really something that as a society we need to 
develop, focus on, and understand how critical it has become.
    Dr. Madrian. Those issues are all related, and it would 
behoove us to think of the interconnections. Absolutely.
    Representative Delaney [presiding]. Well I have no further 
questions. I want to join with my colleagues in thanking you 
all for your terrific testimony here today. It was all very 
interesting and very informative.
    There is a fair amount of agreement, obviously, as 
Congressman Hanna said: a renewed focus on retirement, a 
renewed focus on making minor calibrations to some of our most 
important kind of safety net social insurance programs like 
Social Security; the sooner we do them the better and easier it 
will be to do.
    A fair amount of emphasis on care-givers. But it is still a 
great reminder to me that a lot of work needs to be done as it 
relates to parity and equality with respect to women in the 
workforce. Because this issue that we are talking about here, 
which is so terribly important, is in part based on some unique 
aspects of the fact that women in fact live longer than men do, 
and that makes this issue a more acute issue.
    It makes it a more acute issue for everyone who lives long 
these days, but it also reflects, in my opinion, the deep 
injustice that continues to affect women in the work force, 
particularly as they bear so many burdens in our society. 
Because, you know, women are my heroes because they do so many 
things in our society that in fact men do not do. They care for 
children more. They care for elderly Americans more. And they 
deserve equal and fair treatment in the work force when they 
pursue their careers.
    So this hearing, again, underscores the importance of that. 
So I just want to thank everyone for being here and for 
participating in this important discussion. And unless 
Congressman Hanna has anything else, we will conclude the 
hearing.
    (Whereupon, at 11:29 a.m., Wednesday, May 21, 2014, the 
hearing in the above-entitled matter was adjourned.)
                       SUBMISSIONS FOR THE RECORD

           Prepared Statement of Representative Richard Hanna
    Experience shows a strong economy is the foundation of a secure 
retirement. Workers with good jobs and adequate savings are better 
prepared to enjoy their retirement years. Women tend to live longer 
than men so a strong and vibrant economy is even more critical to 
providing them with a secure retirement.
    Unfortunately, our sluggish economy and aging population threaten 
our nation's future retirement security.
    As Chairman Brady has observed, America has fallen into a ``growth 
gap.'' Our economy is growing at half the rate of previous recoveries. 
That means we are falling further behind in terms of jobs and income, 
relative to where we should expect to be.
    Fewer jobs and less income mean Americans will be less prepared for 
retirement. Older workers who lose their job often retire before they 
are ready. That means lower Social Security benefits and less 
retirement savings. Spreading fewer resources over more years, results 
in a less secure retirement.
    Our nation's population is also getting older. As the youngest 
Baby-Boomers enter their retirement years, we will undergo a dramatic 
demographic shift. The ratio of workers to retirees will shift from 
roughly three-to-one to only two-to-one.
    This demographic shift will undermine the pay-as-you-go financing 
of Social Security and Medicare. As a result, neither program will be 
able to pay its promised benefits.
    Our continuing growth gap and looming entitlement crisis will 
adversely affect every American, but especially women.
    Women typically have lower lifetime earnings and longer life 
expectancies than men. Women are also less likely to be covered by an 
employer pension plan. As a result, they are at greater risk of falling 
into poverty during their retirement years.
    To improve the retirement security of women, we must understand the 
nature and extent of the problem.
    As we focus on the topic of today's hearing, we must not lose sight 
of the fact that a growing economy creates more jobs, higher wages, and 
greater retirement security for both men and women.
    Economic growth alone cannot provide a secure retirement or prevent 
the insolvency of our entitlement programs. But without more growth, 
our task will be that much harder.
    We have a distinguished panel of witnesses today, including a 
former member of the Joint Economic Committee staff, Mrs. Rachel 
Greszler. I look forward to each of our witnesses' testimony and hope 
we gain important insights than can help us address this important 
issue.

[GRAPHIC] [TIFF OMITTED] 


                                  
