Why Women Need Retirement Planning
More Than Men Do

This article is an excerpt from the seminar "Your Next Fifty Years"
by Ginita Wall and Candace Bahr, financial adviser
(based on the book by Ginita Wall and Victoria F. Collins).

The good news for women: they live longer, so they will have longer to enjoy their retirement. The bad news: they live longer, and so their retirement will be much more expensive than for their male counterparts.

Women tend to outlive their husbands. Only one-third of women over sixty-five are married, and on average women will survive their husbands by fifteen years.

The combination of being on their own and living longer means that women need far more retirement income than do most men.

Unfortunately, women's pension plans just don't measure up. A study by the Older Women's League says that women only receive 54% as much private pension income as do men, and they are falling further and further behind. There is a simple reason for this. The pension you receive depends on whether you stay on the job.

Today, more and more women are leaving the work force, because of layoffs, poor job prospects, or to spend more time with their families. On average, women are out of the work force for at least ten years, while men, on average, take just one year out of the work force.

Women often think that they can rely on their husbands' pensions, but they are wrong. Let's assume that a couple is living on the husband's pension, and the woman dies. Though grief-stricken, the husband suffers no financial detriment, and goes on collecting his full pension. But let's say the husband dies first, as is ordinarily the case.

His wife will probably get only 50% survivor benefits, which won't come close to providing her the income she needs to carry on her life-style. No wonder 41% of older women are living close to the poverty line. Not surprisingly, most widows who are poor now were not poor before their husbands died.

Whether you are married or not, here are some of the things that you can do to build a secure retirement for yourself.

Make retirement plans a priority when you consider a job

Consider sacrificing some current salary in return for a good retirement plan, and seek out employers who will match part or all of your savings in a contributory plan.

Work as long as you can at the highest salary you can

The longer you work, the more you can sock away for retirement. And the older you are when you retire, the fewer years of retirement you will have to fund.

Higher Social Security benefits are an extra bonus for those years of hard work. If you pay into Social Security for at least ten years (or if you qualify for Social Security under your husband's work record), you won't have to pay monthly premiums for Medicare hospital insurance when you retire.

Understand the effect on Social Security benefits of divorce and remarriage

If you divorce, you are entitled to Social Security payments equal to 50% of your ex-husband's benefits, if you were married for at least ten years. You'll lose that right if you remarry, though you'll be entitled to collect payments based on your new husband's benefits. A widow is entitled to her late husband's benefits as long as she doesn't remarry before age 60.

Put money away for retirement on a regular basis

Just $10 to $20 a week can add up, especially if you start young. For example, $20 a week invested in growth mutual funds from age 40 to age 65 will build to a nest egg of $92,000. Start at age 25, and it will grow to nearly $370,000.

Learn about your finances

Don't just sign tax returns, be sure you understand them. Get assistance from your tax preparer if you need explanations.

Identify your financial assets and debts, and begin to save for your future by paying down debt and budgeting.

If you are married, be sure that you and your husband each understand what you own and what you owe, and use insurance to plan for the possibility of death or disability.

At WIFE we welcome your comments and questions.
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