This is the accessible text file for CG Presentations number GAO-07- 270CG entitled '21st Century Challenges: Key Areas for Oversight' which was released on December 12, 2006. This text file was formatted by the U.S. Government Accountability Office (GAO) to be accessible to users with visual impairments, as part of a longer term project to improve GAO products' accessibility. Every attempt has been made to maintain the structural and data integrity of the original printed product. Accessibility features, such as text descriptions of tables, consecutively numbered footnotes placed at the end of the file, and the text of agency comment letters, are provided but may not exactly duplicate the presentation or format of the printed version. The portable document format (PDF) file is an exact electronic replica of the printed version. We welcome your feedback. Please E-mail your comments regarding the contents or accessibility features of this document to Webmaster@gao.gov. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. Because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. United States Government Accountability Office: 21st Century Challenges: key Areas for Oversight: The Honorable David M. Walker: Comptroller General of the United States: Women's Institute for a Secure Retirement: Washington, D.C. December 7, 2006: Estimated Fiscal Exposures ($ trillions): Explicit liabilities (Publicly held debt, military & civilian pensions & retiree health, other); 2000: $6.9; 2006: $10.2. Commitments & Contingencies: e.g., PBGC, undelivered orders; 2000: $0.5; 2006: $0.9. Implicit exposures; 2000: $13.0; 2006: $38.8. Implicit exposures: Future Social Security benefits; 2000: $3.8; 2006: $6.4. Implicit exposures: Future Medicare Part A benefits; 2000: $2.7; 2006: $11.3. Implicit exposures: Medicare Part B benefits; 2000: $6.5; 2006: $13.1. Implicit exposures: Medicare Part D benefits; 2006: $8.0. Total; 2000: $20.4; 2006: $49.9. Source: U.S. government's consolidated financial statement, Social Security and Medicare Trustees reports and Monthly Treasury Statement, September 30, 2006. Note: 2006 estimates are preliminary. Estimates for Social Security and Medicare are at present value as of January 1 of each year and all other data are as of September 30. [End of Table] How Big is Our Growing Fiscal Burden? Our total fiscal burden can be translated and compared as follows: Total fiscal exposures: $49.9 trillion; Total household net worth: $53.3 trillion: * Burden/Net worth ratio: 94 percent. Burden: Per person: $165,000; Per full-time worker: $395,000; Per household: $435,000. Income: Median household income: $46,326; Disposable personal income per capita: $32,392. Notes: (1) Federal Reserve Board, Flow of Funds Accounts, Table B.100, 2006:Q2 (Sept. 19, 2006); (2) Burdens are calculated using estimated total U.S. population as of 9/30/06, from the U.S. Census Bureau; full- time workers reported by the Bureau of Economic Analysis, in NIPA table 6.5D (Aug. 2, 2006); and households reported by the U.S. Census Bureau, in Income. Poverty, and Health Insurance Coverage in the United States: 2005 (Aug. 2006); (3) U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2005 (Aug. 2006); and (4) Bureau of Economic Analysis, Personal Income and Outlays: September 2006, table 2, 2006:Q3, (Oct. 30, 2006). Sources: GAO analysis. [End of Table] Composition of Spending as a Share of GDP Under Baseline Extended (January 2001): [See PDF for image] - graphic text: Line/Stacked Bar combo chart with 4 groups, 1 line (Revenue) and 4 bars per group. 2005; Net interest: 0.8%; Social Security: 4.3%; Medicare & Medicaid: 3.7%; All other spending: 8.0%; Revenue: 20.3%. 2015*; Net interest: 0%; Social Security: 5.1%; Medicare & Medicaid: 4.9%; All other spending: 5.6%; Revenue: 20.4%. 2030*; Net interest: 0%; Social Security: 6.6%; Medicare & Medicaid: 9.4%; All other spending: 4.0%; Revenue: 20.4%. 2040*; Net interest: 0%; Social Security: 6.7%; Medicare & Medicaid: 9.0%; All other spending: 4.4%; Revenue: 20.4%. *All other spending is net of offsetting interest receipts. Source: GAO's January 2001 analysis. [End of Figure] Composition of Spending as a Share of GDP: (Assuming Discretionary Spending Grows with GDP After 2006 and All Expiring Tax Provisions are Extended): [See PDF for image] - graphic text: Line/Stacked Bar combo chart with 4 groups, 1 line (Revenue) and 4 bars per group. 2005; Net interest: 1.5%; Social Security: 4.2%; Medicare & Medicaid: 3.9%; All other spending: 10.5%; Revenue: 17.5% 2015; Net interest: 2.5%; Social Security: 4.5%; Medicare & Medicaid: 5.3%; All other spending: 9.8%; Revenue: 17.5% 2030; Net interest: 7%; Social Security: 6.7%; Medicare & Medicaid: 8.5%; All other spending: 9.8%; Revenue: 17.6% 2040; Net interest: 14%; Social Security: 7.6%; Medicare & Medicaid: 10.3%; All other spending: 9.8%; Revenue: 17.6% Source: GAO's August 2006 analysis. [End of Figure] The Way Forward: A Three-Pronged Approach: 1. Improve Financial Reporting, Public Education, and Performance Metrics: 2. Strengthen Budget and Legislative Processes and Controls: 3. Fundamental Reexamination & Transformation for the 21St Century (i.e., entitlement programs, other spending, and tax policy): Solutions Require Active Involvement from both the Executive and Legislative Branches: 21st Century Challenges Report: Provides background, framework, and questions to assist in reexamining the base: Covers entitlements & other mandatory spending, discretionary spending, and tax policies and programs: Based on GAO's work for the Congress: Issued February 16, 2005: Twelve Reexamination Areas: Mission Areas: * Defense: * International Affairs: * Education & Employment: * Natural Resources, Energy & Environment: * Financial Regulation & Housing: * Retirement & Disability: * Health Care: * Science & Technology: * Homeland Security: * Transportation: Crosscutting Areas: * Improving Governance: * Reexamining the Tax System: Key Elements for Economic Security in Retirement: Adequate retirement income: * Savings: * Social Security: * Pensions: * Earnings from continued employment (e.g., part-time): Affordable health care: * Medicare: * Retiree health care: Long-term care (a hybrid): Major Players: * Employers: * Government: * Individuals: * Family: * Community: GAO Criteria for Evaluating Social Security Reform Proposals: Reform proposals should be evaluated as packages that strike a balance among individual reform elements and important interactive effects. Comprehensive proposals can be evaluated against three basic criteria: Financing sustainable solvency: Balancing adequacy and equity in the benefits structure: Implementing and administering reforms: Social Security Represents an Important Source of Income for Women: 88 percent of retirement-age women receive Social Security: Most women receive benefits at least in part based on their spouse's record. About 38 percent of women receive benefits solely on their own work record: Social Security represents an average of 53 percent of total income for unmarried women over 65, versus 38 percent of total income for unmarried men and 33 percent of total income for married couples of the same age: Source: Social Security Administration. Some Social Security Proposals are Targeted to Protect or Enhance Benefits for Women: Changes to spousal benefits--including earnings sharing between spouses, reduction in spousal benefits/increase to survivor's benefits, and reduction of the 10-year marriage requirement for divorced spouses: Changes in benefit computation--including dependent care credits, and shortening the computation period used to calculate retirement benefits: Establish minimum benefit--indexed to poverty level or percentage of poverty level: Other Social Security Reform Proposals May Weaken Benefits for Women: Changes in benefit computation--would extend the benefit computation period from 35 to 38 or more years, which would lower average benefits for most workers, especially those with fewer years of work history: Individual accounts: * New risks include investment risk, longevity risks, and lack of spousal protections: * Possible benefits include potential higher returns, and inheritability/ownership: * Women's tendency to invest more conservatively than men can have both positive and negative effects on income in retirement: Pension Protection Act of 2006: An Important Reform with Unfinished Business: PPA shrinks, but does not close, many loopholes regarding DB plan funding: PBGC deficit expected to continue to grow over the long term: Ultimately does not address fundamental mismatch between DB plan assets and liabilities: Will likely not reverse long-term decline in DB system: Financing of adequate retirement for all Americans continues to pose a major national challenge: * Issues of coverage and plan design remain largely unanswered: * Appropriate balance of responsibility for retirement among employers, government and workers remains unclear: Did not fully resolve issues raised by floor/offset arrangements with significant investment concentrations in employer securities: Pension Income for Women: Roughly half of all workers have access to retirement programs through their employer: Currently retired women are less likely than retired men to have a significant portion of their income from non-Social Security pensions: * In 2003, 29 percent of women and 45 percent of men age 65 and older had pension income: In 2004, 54 percent of full-time working women participated in employer- sponsored pensions, versus 53 percent of men; however, women average lower benefits due to lower average earnings and years of work: Women are Less Likely Than Men to Have Pension Coverage: Women are less often in the paid labor force: More often ineligible to participate (part-time work): More frequently fail to meet vesting requirements (intermittent labor force participation) when employed by firms sponsoring pensions: More often employed in industries with below average rates of pension plan sponsorship, such as service or retail vs. manufacturing industries: However, women may receive spousal or survivor benefits through their husbands' pensions: Women's Pension Coverage is Improving, but a Significant Gap Remains: A 2003 study predicted that while women's income from private pensions should rise sharply relative to men's over the next 20 years, a substantial gap will remain: Even if experience and salary gaps are eliminated, women accumulate less pension wealth than men: Low-income women are particularly vulnerable: Source: Even, W.E., & Macpherson, D.A. (2003). When Will the Gender Gap in Retirement Income Narrow? Participation Rates in Employment-based Retirement Plans: Percent of Wage and Salary Workers Ages 21-64 Who Participated in an Employment-based Retirement Plan, 1987-2004: [See PDF for Image] - graphic text: Line graph with 2 lines, one representing the percentage of women and one the percentage of men: Year: 1987; Percent Men: 51%; Percent Women: 40.7%. Year: 1988; Percent Men: 51.2%; Percent Women: 40.8%. Year: 1989; Percent Men: 51.1%; Percent Women: 42.9%. Year: 1990; Percent Men: 51.5%; Percent Women: 42.9%. Year: 1991; Percent Men: 50.1%; Percent Women: 43.2%. Year: 1992; Percent Men: 48.8%; Percent Women: 43.9%. Year: 1993; Percent Men: 48.5%; Percent Women: 43.6%. Year: 1994; Percent Men: 51.0%; Percent Women: 45.2%. Year: 1995; Percent Men: 50.3%; Percent Women: 45.0%. Year: 1996; Percent Men: 50.8%; Percent Women: 45.8%. Year: 1997; Percent Men: 51.6%; Percent Women: 46.4%. Year: 1998; Percent Men: 53.6%; Percent Women: 48.1%. Year: 1999; Percent Men: 53.6%; Percent Women: 48.5%. Year: 2000; Percent Men: 53.7%; Percent Women: 49.3%. Year: 2001; Percent Men: 51.8%; Percent Women: 47.6%. Year: 2002; Percent Men: 49.7%; Percent Women: 46.6%. Year: 2003; Percent Men: 49.5%; Percent Women: 47.1%. Year: 2004; Percent Men: 49.4%; Percent Women: 47.2%. Source: Employment Benefit Research Institute, Issue Brief 286, October 2005. [End of Figure] Across All Worker Status Categories, Women Are More Likely to Participate in Retirement Plans: Percentage of Wage and Salary Workers Ages 21-64 Who Participated in an Employment-Based Retirement Plan, By Work Status, 2004: [See PDF for Image] - graphic text: Bar graph with two bars for each section. Full-time, Full-year; Women: 58.2%; Men: 55.4%. Full-Time, Part-Year; Women: 35.4%; Men: 30.1%. Part-Time, Full-Year; Women: 27.6%; Men: 20.2%. Part-Time, Part-Year; Women: 15.4%; Men: 12.5%. Note: While the previous slide showed that female wage and salary workers ages 21-64 were found-in the aggregate-to participate in a retirement plan at a lower level than males did, this is mainly due to female workers' overall lower earnings and/or lower rates of full-time work in comparison with males. As this slide illustrates, however, across all worker status categories, females were more likely to participate in a retirement plan than males. Source: Employee Benefit Research Institute estimates from 2005 March Current Population Survey: [End of Figure] Implications of the Shift From Defined Benefit to Defined Contribution Pension Plans: DB plans typically have special protections for spouses; DC plans typically do not: DB plans typically offer an annuity which provides a guaranteed life income; DC plans typically do not offer an annuity benefit: With DCs investment risk and decision-making generally lie with the employee: Women are less likely to preserve a lump-sum pre-retirement distribution in a tax-qualified savings vehicle prior to retirement: However, DCs are portable and generally better for workers who move in and out of the workforce: Maximum allowable vesting requirements are shorter in DC plans: Defined Contribution Plan Proposals: Spousal Consent: The Retirement Equity Act of 1984 required spousal consent to waive joint and survivor protections in defined benefit pensions: * In the following 10 years, the number of married men selecting joint and survivor annuities increased 18 percent: Some advocate extending spousal consent to defined contribution retirement distributions: Annuities Offer Some of the Same Protections as Social Security and DB Payments: Annuities are a reliable method for ensuring a life-time income stream: While Social Security is gender neutral in its benefit payments, women pay higher rates than men in the individually purchased private annuity market, based on their longer expected lifetimes: While Social Security benefits are adjusted for cost of living, few privately purchased annuities have this adjustment: Increased Responsibility and Risk for Employee in Defined Contribution Plans: Employees with DC pension plans must both elect to participate and select their investment choices: Employees bear the risk of market fluctuation, inflation, and proper selection/diversification of investments: Advocates favor automatic enrollment, which has been shown to increase participation, especially for lower earners, and automatic escalation of contribution amounts, which would further increase contribution rates: Retirement Savings "Leakage" is Another Risk of Defined Contribution Plans: Only half the population preserves lump-sum pre-retirement distributions: Of their most recent lump-sum pre-retirement distribution, 40 percent of women reported rolling their entire balance into a tax-qualified savings vehicle, versus 47 percent of men in 2003: 44 percent of women reported rolling over some of those distributions into another tax-qualified savings vehicle, versus 50 percent of men in 2003: Source: Employee Benefit Research Institute, Issue Brief 289, January 2006: Aspects of Defined Contribution Pension Plans That May Enhance Women's Retirement Income: Portability: Typically, accumulated assets can be rolled over and move with the employee as they change jobs and the plan design does not penalize employees who have multiple employers: Vesting: Defined contribution: Since 2001, DC plans have been required to fully vest either after three years of service, or at the rate of 20 percent per year, starting in the second year: Defined benefit: Vesting requirements cannot exceed 7 years: Issues to Consider in Examining Health Care Cost, Access, and Quality Challenges: In reforming our health care system, the public needs to be educated about the differences between wants, needs, affordability, and sustainability l at both the individual and aggregate level. Ideally, health care reform proposals will: * Align incentives for providers and consumers to make prudent choices about health insurance coverage and prudent decisions about the use of medical services, * Foster transparency with respect to the value and costs of care, and: * Ensure accountability from health plans and providers to meet standards for appropriate use and quality. Issues to Consider In Examining Women and Retirement: Life expectancy by gender varies: Labor force participation rates by age and gender vary: Retirement income and pension coverage vary by gender: Working longer may ease the challenges of an aging population: Women Live Longer Than Men But The Gap is Closing Life Expectancy at Age 65, 1940-2005: [See PDF for Image] - graphic text: Line graph with two lines, one for women and one for men. Year: 1940; Male: 12.7; Female: 14.7. Year: 1945; Male: 13.0; Female: 15.4. Year: 1950; Male: 13.1; Female: 16.2. Year: 1955; Male: 13.1; Female: 16.7. Year: 1960; Male: 13.2; Female: 17.4. Year: 1965; Male: 13.5; Female: 18.0. Year: 1970; Male: 13.8; Female: 18.5. Year: 1975; Male: 14.2; Female: 18.7. Year: 1980; Male: 14.7; Female: 18.7. Year: 1985; Male: 15.2; Female: 18.8. Year: 1990; Male: 15.7; Female: 19.0. Year: 1995; Male: 16.2; Female: 19.1. Year: 2000; Male: 16.7; Female: 19.4. Year: 2005; Male: 17.0; Female: 19.6. Source: Social Security Trustees Report, 2006: [End of Figure] Numeric Growth in Labor Force by Women and Men, Projected 2004-2014: [See PDF for Image] - graphic text: Bar graph. Numbers in Thousands. Women: 7,485. Men: 7,214. Source: Bureau of Labor Statistics: Women Have Weaker Labor Force Attachment Than Men on Average: Compared to men, on average: Women work fewer hours per year: Women are less likely to work a full-time schedule: Women often bear the burden of caring for younger and older generations (e.g., their children and their parents): Women leave the labor force for longer periods of time than men: Decline in Labor Force Participation by Older Americans Has Leveled Off: [See PDF for Image] - graphic text: Line graph with 4 lines representing men and women of two different age groups. Labor force participation rate. Year: 1970; Men 55-64: 83%; Men 65+: 26.8%; Women: 55-64: 43.0%; Women: 65+: 9.7%. Year: 1971; Men 55-64: 82.1%; Men 65+: 25.5%; Women: 55-64: 42.9%; Women: 65+: 9.5%. Year: 1972; Men 55-64: 80.4%; Men 65+: 24.3%; Women: 55-64: 42.1%; Women: 65+: 9.3%. Year: 1973; Men 55-64: 78.2%; Men 65+: 22.7%; Women: 55-64: 41.1%; Women: 65+: 8.9%. Year: 1974; Men 55-64: 77.3%; Men 65+: 22.4%; Women: 55-64: 40.7%; Women: 65+: 8.1%. Year: 1975; Men 55-64: 75.6%; Men 65+: 21.6%; Women: 55-64: 40.9%; Women: 65+: 8.2%. Year: 1976; Men 55-64: 74.3%; Men 65+: 20.2%; Women: 55-64: 41.0%; Women: 65+: 8.2%. Year: 1977; Men 55-64: 73.8%; Men 65+: 20.0%; Women: 55-64: 40.9%; Women: 65+: 8.1%. Year: 1978; Men 55-64: 73.3%; Men 65+: 20.4%; Women: 55-64: 41.3%; Women: 65+: 8.3%. Year: 1979; Men 55-64: 72.8%; Men 65+: 19.9%; Women: 55-64: 41.7%; Women: 65+: 8.3%. Year: 1980; Men 55-64: 72.1%; Men 65+: 19.0%; Women: 55-64: 41.3%; Women: 65+: 8.1%. Year: 1981; Men 55-64: 70.6%; Men 65+: 18.4%; Women: 55-64: 41.4%; Women: 65+: 8.0%. Year: 1982; Men 55-64: 70.2%; Men 65+: 17.8%; Women: 55-64: 41.8%; Women: 65+: 7.9%. Year: 1983; Men 55-64: 69.4%; Men 65+: 17.4%; Women: 55-64: 41.5%; Women: 65+: 7.8%. Year: 1984; Men 55-64: 68.5%; Men 65+: 16.3%; Women: 55-64: 41.7%; Women: 65+: 7.5%. Year: 1985; Men 55-64: 67.9%; Men 65+: 15.8%; Women: 55-64: 42.0%; Women: 65+: 7.3%. Year: 1986; Men 55-64: 67.3%; Men 65+: 16.0%; Women: 55-64: 42.3%; Women: 65+: 7.4%. Year: 1987; Men 55-64: 67.6%; Men 65+: 16.3%; Women: 55-64: 42.7%; Women: 65+: 7.4%. Year: 1988; Men 55-64: 67.0%; Men 65+: 16.5%; Women: 55-64: 43.5%; Women: 65+: 7.9%. Year: 1989; Men 55-64: 67.2%; Men 65+: 16.6%; Women: 55-64: 45.0%; Women: 65+: 8.4%. Year: 1990; Men 55-64: 67.8%; Men 65+: 16.3%; Women: 55-64: 45.2%; Women: 65+: 8.6%. Year: 1991; Men 55-64: 67.0%; Men 65+: 15.7%; Women: 55-64: 45.2%; Women: 65+: 8.5%. Year: 1992; Men 55-64: 67.0%; Men 65+: 16.1%; Women: 55-64: 46.5%; Women: 65+: 8.3%. Year: 1993; Men 55-64: 66.5%; Men 65+: 15.6%; Women: 55-64: 47.2%; Women: 65+: 8.1%. Year: 1994; Men 55-64: 65.5%; Men 65+: 16.8%; Women: 55-64: 48.9%; Women: 65+: 9.2%. Year: 1995; Men 55-64: 66.0%; Men 65+: 16.8%; Women: 55-64: 49.2%; Women: 65+: 8.8%. Year: 1996; Men 55-64: 67.0%; Men 65+: 16.9%; Women: 55-64: 49.6%; Women: 65+: 8.6%. Year: 1997; Men 55-64: 67.6%; Men 65+: 17.1%; Women: 55-64: 50.9%; Women: 65+: 8.6%. Year: 1998; Men 55-64: 68.1%; Men 65+: 16.5%; Women: 55-64: 51.2%; Women: 65+: 8.6%. Year: 1999; Men 55-64: 67.9%; Men 65+: 16.9%; Women: 55-64: 51.5%; Women: 65+: 8.9%. Year: 2000; Men 55-64: 67.3%; Men 65+: 17.7%; Women: 55-64: 51.9%; Women: 65+: 9.4%. Year: 2001; Men 55-64: 68.3%; Men 65+: 17.7%; Women: 55-64: 53.2%; Women: 65+:9.6 %. Year: 2002; Men 55-64: 69.2%; Men 65+: 17.9%; Women: 55-64: 55.2%; Women: 65+: 9.8%. Year: 2003; Men 55-64: 68.7%; Men 65+: 18.6%; Women: 55-64: 56.6%; Women: 65+: 10.6%. Year: 2004; Men 55-64: 68.7%; Men 65+: 19.0%; Women: 55-64: 56.3%; Women: 65+: 11.1%. Year: 2005; Men 55-64: 69.3%; Men 65+: 19.8%; Women: 55-64: 57.0%; Women: 65+: 11.5%. Source: United States Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, [Hyperlink, http://www.bis.gov/data/home.htm]. [End of Figure] Why Older Americans Don't Work Longer: Cultural Expectation to Retire in Mid-60s: Social Security early retirement age is 62: Many private pensions have similar or lower eligibility ages: Older Americans Perceive Few Opportunities: Few older workers felt they had opportunities for partial retirement: Most older workers and retirees saw low wage, low skilled jobs as their primary employment opportunities: Most Employers Do Not Make a Special Effort to Hire and Retain Older Workers: Many employers say they are willing to implement policies to recruit and retain older workers, but few have actually done so: Employers cite barriers, such as federal pension regulations, to flexible employment options for older workers: Working Longer May Help Address the Challenges of an Aging Population: Impact on the Economy: Larger labor force: Additional economic growth: Impact on the Federal Budget: Additional tax revenue: Reduced expenditures: Social Security & Medicare: Impact on Individuals: Enhanced retirement security and quality of life: Median Amounts of Retirement Income are Smaller for Women Than Men: Median Value of Retirement Income from Specified Source of Men and Women 65 and Older, 2004: [See PDF for Image] - graphic text: Bar graph with a bar for men and a bar for women for each category. Wages and Salaries; Men: $20,800; Women: $ 12,000. Social Security; Men: $12,583; Women: $8,799. Asset Income; Men: $964; Women: $750. Pension Income; Men: $12,000; Women: $6,141. Source: Congressional Research Service: [End of Figure] Women Are As Likely As Men to Receive Social Security Benefits, but Are Less Likely to Have Income from Other Sources: Percentage of Men & Women 65 & Older Receiving Income from Various Sources, 2004: [See PDF for Image] - graphic text: bar graph with one bar representing men and the other women for each category. Social Security; Men: 88%; Women: 88%. Earnings; Men: 23%; Women: 14%. Other Public Pension; Men: 14%; Women: 10%. Private Pensions of Annuities; Men: 32%; Women: 18%. Income from Assets; Men: 59%; Women: 53%. Source: Social Security Administration, Income of the Population 55 or Older, 2004: [End of Figure] Older Women Are More Likely Than Older Men to Be Living Below the Poverty Level: Percent of Men and Women With Income Below 100 Percent of Poverty Level, 2004: [See PDF for Image] - graphic text: Bar graph with each bar representing men or women for each age group. Age: 55-59; Men: 7.4%; Women: 9.4%. Age: 60-64; Men: 9.6%; Women: 11.1%. Age: 65-74; Men: 7.3%; Women: 11.1%. Age: 75+; Men: 6.6%; Women: 12.8%. Source: U.S. Census Bureau, Current Population Survey, March 2005: [End of Figure] Women Have Fewer Resources At Retirement Than Men: Differences in lifetime earnings and work histories result in lower retirement income for women; compared to men, on average: Women have weaker labor force attachment and lower earnings: Women receive lower monthly Social Security benefits: Women are less likely to have pension coverage: Women receive lower pension benefits: Women receive less from asset income: Impact of Life Events on Financial Security: Marital Status: * Divorce: * Widowhood: Health Shocks: Long-term Care: Financial Impact of Divorce: For women, and some men, divorce typically means a decline in retirement income or savings or even poverty: The divorce rate increased significantly throughout the 1950s-1970s, but was stable from the mid-1970s through the mid-1990s: In 2001, first marriages ending in divorce lasted on average 8 years, 2 ears less than the minimum required for Social security spousal benefits: Women and men who divorce experience a 44 percent decline in household wealth, on average: Sources: U.S. Census and Boston Center for Retirement Research: Financial Impact of Widowhood: Women and men who become widowed experience, on average, a 13 percent decline in household wealth: Only 21 percent of widows receive survivor pensions based on their husbands' benefits: In 2003, of those aged 65 and over: * 14 percent of men were widowers: * 44 percent of women were widows: Financial Impact of Health Shocks: Workers Near Retirement Age May Lose Current and Retirement Income Due to Unexpected Negative Health Events: Health shocks are likely to result in a loss of lifetime income for individuals and family because: * Affected worker may need to reduce work dramatically: * Spouse may also reduce work dramatically: * Private savings may have to be used to finance additional medical expenses: Living Longer Increases the Likelihood of Becoming Disabled: Proportion of those age 65 and over with chronic disability, 1999: Women: 23%; Men: 15%. Percentage of Medicare enrollees age 65 and over reporting inability to perform at least 1 of 5 certain physical functions, 2002: Women: 31%; Men: 18%. Source: Older Americans 2004: Key Indicators of Well-Being, Federal Interagency Forum on Aging Related Statistics: Living Longer Increases the Likelihood of Needing Long-term Care: Percent of the Population Needing Long-term Care, by Age, 2000: [see PDF for Image] - graphic text: Bar graph. Age: 64 and younger; Percent: 1.4%. Age: 65 and older; Percent: 14.0%. Age: 85 and Older; Percent: 50.0%. Source: Georgetown University Long Term Care Financing Project, "Who Needs Long Term Care?" 2003: [End of Figure] Women Represent More Than Two-thirds of Those Needing Long-Term Care: Women represent: 69 percent of those age 65 and older who reside in a community such as an assisted living care center: 72 percent of all nursing home residents: Source: Georgetown University Long Term Care Financing Project, "Who Needs Long Term Care?" 2003. Cost of Long-term Care: Average Annual Health Care Costs Among Medicare Enrollees Age 65 and Over, by Institutional Status, 2001: Nursing Homes and Other Long-term Care Institutions; Average cost in Dollars: $46,810. Community Residents; Average cost in dollars: $8,466. Source: Older Americans 2004: Key Indicators of Well-Being, Federal Interagency Forum on Aging Related Statistics: [End of table] GAO's Ongoing Work on Women's Retirement: Gordon Smith, Chair of the Senate Special Committee on Aging, has requested that GAO: Describe the current status of women in the labor force, the sources and adequacy of women's retirement income, and the rate of poverty among women: Describe and examine the effects that significant life events may have on women's retirement income, such as divorce, health shocks, widowhood, or workforce interruptions: Examine and describe the potential impacts of Social Security and employer-provided pension reforms that are targeted at women, as well as those that may inadvertently have a different impact on men and women: Project women's retirement income given selected elements of individual Social Security and employer-provided pension reform options. Projected issuance date is June 2007: Key Oversight Areas for Congress: On November 17, 2006, the Comptroller General submitted a letter to Congress recommending three areas of consideration to improve the 110th Congress' oversight of federal programs: Targets for near-term oversight (e.g., reviewing the effectiveness of strategies to ensure workplace safety): Policies and programs that are in need of fundamental reform and re- engineering (e.g., strengthening retirement security through reforming Social Security, increasing pension saving, and promoting financial literacy): Governance issues that should be addressed to help ensure an economical, efficient, ethical, and equitable federal government capable of responding to the various challenges and capitalizing on related opportunities in the 21St century (e.g., pursuing the development of key national indicators): Strengthen Retirement Security Through Reforming Social Security, Increasing Pension Saving, and Promoting Financial Literacy: Recommended Congressional actions to improve oversight of the Social Security and pension systems: Take actions to restore fiscal solvency and sustainability to the Social Security programs. Monitor the effectiveness of recent pension legislation designed to strengthen plan funding and reduce reliance on the federal pension insurance program: Examine adequacy of 401(k) balances and other forms of self-directed saving: Improve federal agencies' efforts to inform American workers about the importance of saving, the amounts that will be necessary for an adequate retirement, and the importance of annuitizing retirement balances: Evaluate and improve federal agencies' coordinated leadership of financial literacy initiatives to enhance such programs' effectiveness: Identify and estimate the cost of ways of evaluating financial literacy programs to determine if they promote positive behavioral change: Key Leadership Attributes Needed for These Challenging and Changing Times: * Courage: * Integrity: * Creativity: * Stewardship: On the Web: Web site: [Hyperlink, http://www.gao.gov/cghome.htm]: Contact: Paul Anderson, Managing Director, Public Affairs AndersonP1@gao.gov (202) 512-4800: U.S. Government Accountability Office 441 G Street NW, Room 7149 Washington, D.C. 20548: Copyright: This is a work of the U.S. government and is not subject to copyright protection in the United States. 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