Women's Agenda Conference
National Center for Policy Analysis
March 4, 2002
It's a pleasure and honor to join you this morning.
I want to also commend Senator Kay Bailey Hutchison for her leadership on retirement security issue in general and for her leadership with Congresswoman Barbara Cubin for their inspiration and guidance in developing today's program. I look forward to working with both of these women in the months ahead on this and many other issues of importance to America's workers.
The conference agenda today reminds us how profoundly American women have been affected by the social and economic changes of the last few decades. The issues you will address - taxes, retirement, Social Security, health care - are important national concerns. But they have a unique, serious impact on the lives of women.
But that's only half of the story. The other half of the story is how profoundly women have impacted the issues.
We have not been, and are not, passive spectators in American change. Our lives and aspirations have reshaped the public concerns of the nation.
Today's schoolchildren can still hear their history straight from some of the women who cast the first women's votes in 1920. They are growing up watching American women lead...in government, in education, in scientific and scholarly research, in business management. I look around this room, and see many of the best. Your leadership is helping set the priorities and direction for the entire nation.
Very real problems still face American women, as we are here today to discuss. But I want to suggest that the solutions to these problems will be found in the same kind of action that has brought us so much benefit: Vigorous, determined exercise of our responsibilities as American citizens. Practical, personal action on our own behalf.
I've got to tell you about one of my favorite letters of Abigail Adams. If you've read some of the recent histories about the Adams, you may know that Abigail handled major family affairs - farm management, retail trading, land deals, investing and wartime survival - while her husband John worked long years away from home. [I think a lot of modern women can relate!] Abigail took every detail seriously, and left us her story in her marvelous letters.
My favorite is not the most famous one...reminding her husband John to "Remember the Ladies" when forming the new republic. Instead, it's some feisty advice about what independence takes: spirit and ammunition both. In June 1775, with fighting breaking out all around their Massachusetts home, Abigail wrote, "Courage we have in abundance, and conduct, I hope we shall not want, but [gun] powder - where shall we get a sufficient supply?"
This was a woman who understood the practicalities of life. In personal and public business, she knew the importance of being prepared, and she knew what it took: courage, conduct, and gunpowder too.
Well, today, I want to talk briefly about the spirit and ammunition that today's women need, for another kind of independence - personal independence in retirement. Because how we prepare to meet this challenge, is going to have significant impact on women's lives and America's national welfare.
There's been tremendous attention paid to retirement security in the last few years, and for good reason. The overall retirement savings rate is too low, for far too many Americans. This is especially true for women.
What's more, those who do have retirement savings, average significantly lower levels of saving than men. Professor Vickie Bajtelsmit- I know that we are going to hear from her later this morning - co-authored a study recently, finding that...although women are saving more...and pension balances are rising...the average woman's 401(k) balance is half that of men.
Why are women so unprotected in this area of retirement investments? There are many reasons. Women may interrupt their careers, or leave jobs before they are vested in a pension, to take care of their families. As caregivers for children or older parents, women are more likely than men to work in part-time jobs that don't qualify for pension coverage. Many women work for small businesses that don't offer retirement plans. Even where a retirement plan is available, a woman's interrupted work history, shorter tenure on the job, or part-time work can result in a lower salary - and, consequently, lower savings.
At the same time, rising life spans require that we save more for retirement than ever. For people born before 1940, life expectancy at birth was actually less than the Social Security retirement age of 65. But improving health and social welfare made a new reality. A woman retiring at age 65 this year has a life expectancy above 84 years of age.
We need to be saving more and saving better. For most people, this means learning new saving and investment strategies...and having lifelong awareness about their retirement needs.
Our first challenge is to get the message out. In our information age, this means cutting through a lot of noise.
Bookstore shelves and best-seller lists are awash with how-to information and opinion. Type "retirement advice" into a leading search engine and you get 743,000 hits.
Type "investment help" and the sites number...three million plus.
No wonder so many people throw up their hands. They want to know, what does this all mean to me? What's credible? What's useful? What's relevant?
I believe that to answer these questions, we must reach Americans where they are - in the workplace and in the home - as they cope with the real, competing demands of life.
This was a major emphasis of last week's Saver Summit...which brought together a bipartisan group of retirement experts from across the country, to help emphasize the need for retirement saving to every generation of Americans. We at the Department of Labor are also targeting information about retirement security directly to women.
The fact is that even when women know they should save...they are not always acting on that knowledge.
Young women - at a time of life when investing can make the biggest long-term impact - are not taking full advantage of their opportunities to save. Other women are falling prey to some dangerous fallacies, like:
"You don't need to save if your husband has a pension."
"I can cash-out my 401(k) when I change jobs, because I have plenty of time to make it up later."
"A healthy middle-aged woman doesn't need to worry yet about the long-term care costs in old-age."
Falling prey to even one of these myths can jeopardize a woman's financial security as she enters retirement age. On the other hand, taking early action can prevent serious problems:
Wives, whether they work or not, should be thinking about their own retirement security...and make sure they are taking full advantage of every opportunity to save.
As early as possible, women should be thinking about protecting their retirement savings with long-term care insurance.
And right from the start, young people should memorize the "home truths" about the magic of compounding interest: The earlier we start to save, the longer we save, the larger our nest egg will be when we retire.
Facts like these are part of the "new knowledge" needed for retirement saving. But to act on this knowledge, people need more. They need choice over how and where they invest - they need information to manage and control their investments - and they need to be confident that their savings are secure.
The pattern of women's lives today, puts a premium on flexible, portable retirement plans. We need to get more women covered by these plans, and I am actively working with business leaders to encourage just that.
Women will also reap special benefits from President Bush's recent proposal to strengthen 401(k) plans. Among other provisions, his initiatives provide that when an employer contributes company stock to an employee's 401(k), that worker will have the right to diversify out of that stock after a three-year period. This is among the most aggressive of all existing legislative proposals currently on Capitol Hill.
This step will help women who wish to diversify their portfolios...which for most individual investors, is key to reducing risk over the long term. With freedom and more choice over how to invest retirement savings, women can invest in ways that work best for them and their families.
I've said it before: It's not the government's money. It's the employees' money. They earned it, they sacrificed to save it; and they should have the right to decide how to invest it.
The Administration proposals also give employees new control and confidence about saving strategies...through access to the information they need to manage their savings well.
The fact is, most people - not only women - simply don't have the time or inclination to become experts in managing financial portfolios. They have jobs to do, children to take care of, and bills to pay.
At the same time, recent studies and surveys testify to the fact that women have especially risk-averse savings habits. While this can protect against downsides, it can also reduce growth.
To ensure that people have the information they need to manage their savings wisely, the President's plan requires employers to provide quarterly benefit statements about individual pension accounts. And the President's plan encourages employers to give workers access to professional investment advice - from advisors required to act solely in the interests of the workers they advise.
President Bush has asked Congress to move quickly to enact these reforms. Meanwhile, we are continuing a wide range of other activities to help people save with confidence.
At the Department of Labor, retirement security is our specialty...and my personal commitment. We were on the ground investigating Enron before it even declared bankruptcy. And recently, I announced that we will be appointing an independent fiduciary to assume management of Enron's retirement plans.
In fact, the ongoing Enron investigation is one of thousands of employee benefit investigations the Labor Department conducts each year. Last year, our civil investigations resulted in the recovery of $662 million on behalf of aggrieved beneficiaries. Our work also produced 76 indictments...and 49 criminal convictions.
Government, employers, the financial community - all can help. But ultimately, the responsibility for personal saving lies with women themselves.
If we are to protect our retirements, we must take ownership of what it takes to make that retirement secure. This requires actively participating in our own retirement plans.
Let us also be mindful about what saving can mean to our lives.
In 1781, Abigail Adams wrote her husband, "I will purchase you a retreat in the woods of Vermont and retire with you from vexations, toils, hazards and public Life."
John liked Massachusetts. He wrote back: "God willing, I won't go to Vermont."
Choosing our own destinies is what it's all about.
It's up to us to build the foundation for that independence. Our nation's future, as well as our own, depends on it.
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