A new study shows some interesting trends among women nearing retirement age. Researchers found that women with grandchildren are less likely to participate in the workforce than women without grandchildren.
Further, women caring for those grandchildren are the least likely to be employed. And, of the two age groups in the study, women age 58 to 61 were more likely to retire than women age 51 to 54. Finally, the catalyst most likely to prompt a grandmother to leave the workforce was the birth of a grandchild.
These women are not just cutting back their schedules at work or moving to warmer climates sooner than expected. They are retiring early to care for their grandchildren. That finding was not unexpected, because other research has shown that grandparents are more involved in their grandchildren's lives now than they were 30 years ago.
The study did not include data about men, and there were no interviews or surveys to help us understand why women were retiring. Did these women wait to have children until they were in their 30s? Is being a grandmother so new and so important that they leave the workforce a few years ahead of schedule?
Or do the demographics of their children have more to do with it? Maybe a cost/benefit analysis showed it was less expensive for grandma to retire and take care of the grandchildren than to pay for daycare as the parents build their careers -- and their retirement savings.
For policymakers, the reason is not as important as the impact that early retirement may have on their old age. Remember: Women earn less during their working lives, so they save less for retirement; women also live longer than men, so they need to set aside more money to support themselves. The thinking has been that women should work well into their 60s to have enough saved and to take full advantage of Social Security benefits.
We'll leave policy to the Pennsylvania General Assembly and Congress. For us, the study provides more information to use as we work with women on their estate plans. If more women are leaving the workforce before they expected to, they need to revisit their estate plans to account for that. Estate planning is as much about how you spend your later years as it is about what happens after you die.
Source: Crain's Wealth, "Surprising factor in women's retirement decision: grandchildren," Jan. 7, 2015