Why Women Face a Retirement
Crisis
By Liz
Pulliam Weston (excerpted for length)
www.moneycentral.com
Women are living longer than ever and spending more years in
retirement. That means many of us must face some tough
realities.
We're living longer. Isn't that great? Then why are retirement
experts so worried?
Perhaps because longer lives translate into longer retirements,
and we're not doing a great job of saving enough money to last
those extended lifetimes.
The issue is important for men, but it's critical for women.
Among the reasons:
We live longer. The average life expectancy for a newborn girl
in the U.S. is now just a hair under 80 (79.9, to be exact),
according to the Centers for Disease Control, which tracks these
things. For baby boys, it's 74.5, or about five years less.
More to the point, the time we spend in retirement is longer. At
age 65, a woman's life expectancy is another 19.5 years. A man's
is 16.6.
But you shouldn't expect the lights to go out on your 85th
birthday. Demographers predict a lot more of us who are alive
today will survive into our 90s or even later. (If you're
curious about your own life expectancy, check out our
calculator.) Given that the median retirement age is 61 for
women, many of us should be planning on a 30-year retirement --
or even longer.
We're more likely to suffer job interruptions and other income
setbacks. The typical man retiring in 2000 had 44 years in the
workforce, according to the Social Security Administration. The
typical woman had worked 32 years. Fewer working years means
less opportunity to save for retirement and build Social
Security benefits.
It's not just that we take time off to have and raise kids.
We're also more likely to interrupt our work lives to care for
sick parents or other relatives. Seven out of 10 unpaid
caregivers are women, according to AARP, and more than 50% of
caregivers make changes at work to accommodate their patients'
needs. Those accommodations may include working different hours,
working fewer hours or taking unpaid leaves of absence. It's
hard to vie for promotions and income-boosting overtime when you
need to get home to bathe and feed your ailing mother.
We earn less. Yes, the gap is shrinking, but the median income
for full-time working women in 2001 was $30,420, compared to
$40,136 for men. Average Social Security checks for men and
women show the gap in working years and income: Men got a median
amount of $1,008 a month. Women got $774.
We're probably going to die alone. Sorry, but that's the grim
reality. Those of us who don't divorce are still likely to
outlive our husbands. If he's substantially older than you, you
could spend literally decades as a widow. You're going to need
to know how to manage your money and to make sure you have
enough to get you to the finish line.
We're much more likely to retire into poverty. Women overall are
71% more likely than men to live below the poverty line in
retirement. When you compare unmarried women (divorced, widowed,
never married) to married couples, the statistics are more
shocking: Single women are four times more likely than couples
to live in poverty.
We're probably not saving enough -- when we're saving at all.
Survey after survey shows us lagging behind men in saving for
retirement. We're less likely to be saving currently (53% of us
compared to 62% of men, in the most recent study by the Employee
Benefit Research Institute), less likely to be participants in a
401(k) or other retirement workplace plan (37%, compared to 41%)
or to have an IRA or other retirement account outside work (37%,
compared to 46%).
Take charge of your future
Here are other things women need to keep in mind:
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Make
retirement savings a priority. If you're dreaming, however
subconsciously, that you'll be bailed out by Prince Charming
or a lottery ticket, you need to wake up and smell the
espresso. (Read Barbara Stanny's terrific book, "Prince
Charming Isn't Coming: How Women Get Smart About Money," if
you need more convincing.)
What may be even more likely is that you have good
intentions, but other spending keeps getting in the way. I
see this a lot in parents, who are determined to provide the
best for their kids while letting their retirement savings
slide. Do your kids a favor: Save enough so that you're not
such a burden to them in your old age. |
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Take advantage of your 401(k) and other retirement savings
options. As I wrote in "7 common 401(k) blunders," there's
no excuse for not contributing if you're eligible. And you
should do your best to contribute enough to get the full
company match. You can supplement that savings by tossing
money into an IRA or Roth IRA (which is also a good option
if you're not covered by a workplace plan). You also can
save on your own, in a taxable account. |
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Keep your hand in. You may well want to take time off for
your kids or your parents. Just don't stay out of the work
world too long. Every year you don't work can rob you of an
opportunity to contribute to retirement plans and
potentially lower your future Social Security check.
(Full-time homemakers should take other steps to protect
their financial futures. |
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Get educated about money. Once you're retired, you're
playing for keeps. If you make a mistake with your money,
you're much less likely to be able to recover than during
your working years. Get comfortable managing your money well
before you retire, and consider occasional check-ups with an
experienced, objective, fee-only planner.
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