Reforms in latest spending bill could help close gender gap in retirement savings

The omnibus spending bill Congress passed last week included a bundle of retirement savings reforms with a clever acronym: the Setting Every Community Up for Retirement Enhancement, or SECURE, Act 2.0.

It builds on previous legislation passed in 2019 and aims to make saving for retirement easier. The bill includes several provisions that could chip away at one of the biggest disparities in retirement savings: the one between men and women. A report from the TIAA Institute earlier this year showed that while the gap has narrowed over time, women still save about 30% less than men.

Saving for retirement is harder for women because they generally earn less over their lifetimes, said Betsey Stevenson, an economist at the University of Michigan.

“For a large number of reasons,” she said. “Discrimination’s obviously up there, but so are all sorts of forms of inequality in terms of the occupations that tend to attract women and family obligations.”

Women often have more employment gaps and gravitate to flexible work, Stevenson said. The new legislation will make it easier for part-time workers to participate in employer-based retirement plans. It also creates a novel program to allow employers to match a percentage of an employee’s student loan payments as if they were retirement contributions.

“Sixty percent of our college students are women, and women have a lot more student loans than men do,” Stevenson said.

Women also live longer than men, notes Mark Iwry at the Brookings Institution. “Women have a greater need for protected, predictable monthly lifetime retirement income that they can never outlive.”

The bill makes it easier to enroll in annuities — insurance add-ons for 401(k)s that guarantee income for life, almost like a pension. It also adds federal funding to match low-income workers’ retirement contributions and requires employer-sponsored plans to automatically enroll new employees.

That could particularly benefit women of color, whose wages lag even further behind white men, said Shai Akabas of the Bipartisan Policy Center.

“When automatic enrollment is used, participation goes up dramatically for all workers, but especially for low- and moderate-income workers and workers of color,” he said.

Still, Akabas said that more could be done for the nearly 50% of private-sector workers whose employers don’t offer a retirement plan.