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Money January 2016

Financial Fortitude

Women’s Retirement – Bleak or Blessed Financially?

By Karen Telleen-Lawton

Career-wise, we're a sandwich generation, caught between childhood expectations of being unpaid homemakers and wives and today's reality of providing for ourselves. Whether by choice, divorce, or widowhood, we face the challenge of building a retirement nest for ourselves. And doing it now.

Women should have it made in retirement: they receive over 70% of the inherited wealth in the U.S. But this is also true: the median income of women over age 65 is less than 60% of that of men, according to a 2009 figure by the Administration on Aging. Women receive only half the pension benefits that men do. This can make for a risky retirement.

Some women fall into both categories: they're scraping by now but have wealthy elderly parents. Lucky for them – maybe. Unless their projected inheritance is already in a trust, there are no guarantees. Retirement risk for them is maintaining familial relationships and hoping their parents don't fall prey to unscrupulous elderly fraud.

Risky retirement for most boomer women is something entirely different. More often than men, women have worked in service jobs, as teachers, or in backseat jobs supporting their husband’s careers. Some have been full-time mothers, full-time volunteers, or both. Career-wise, we're a sandwich generation, caught between childhood expectations of being unpaid homemakers and wives and today's reality of providing for ourselves. Whether by choice, divorce, or widowhood, we face the challenge of building a retirement nest for ourselves. And doing it now.

The task is not easy. Baby boomer women are so focused on making ends meet and paying off consumer debt that saving for retirement is not a present priority. This is the situation according to findings released in October.

"There is a striking disconnect among women between how they envision their retirement and how they are preparing to realize that vision," says Catherine Collinson, president of the private non-profit Transamerica Center for Retirement Studies. "Women face a number of unique circumstances, such as typically lower wages than men, time out of the workforce to be a parent or caregiver and a longer life expectancy, which present challenges for saving."

If you see yourself or a friend in the figures above, it's time to make some changes. What you don't know can hurt you.

Women need to nurture their health, their savings, and their relevance in their careers. We may be on track with our physical health, but we also need to take full advantage of retirement plans and be prepared on the downside with insurance and emergency savings.

How do you learn about financing and protecting your retirement? Here are some questions to get you started. If you are married, understand your spouse's answers to these as well:

  • Are you or your spouse entitled to a pension or annuity from your employer?
  • Have you chosen a payout policy covering both spouses or just one?
  • Are you fully participating in any company pensions and retirement plans?
  • How is each company benefit integrated with Social Security and Medicare?
  • Do you know their value now and expected value at retirement?
  • Do you know how to maximize your Social Security benefits?
  • You are much more likely to be disabled than to die before old age. Do you have disability insurance?
  • Do you understand which benefits will continue after one spouse's death or disability?
  • Are your investments and retirement accounts diversified?
  • Who is the beneficiary on each account?
  • How will you withdraw money from retirement accounts?
  • Do you understand your Required Minimum Distribution?
  • When you retire, will you keep retirement accounts where they are or roll them into an IRA?
  • Do you have insurance appropriate for protecting your assets and health?
  • Only 14% of Baby Boomer women have a written retirement plan. Do you?
  • Who can you talk to about questions such as these?

It's never too late to improve your financial situation. And if you're not happy with where the path is leading, it's not too late to update your skills. Perhaps now that (fill in the blank: the kids are grown, your parents are gone, whatever) you can launch that career you always wanted. It's much harder to get back into the work force than to stay in, so make sure you're ready (financially and emotionally) before you take down your shingle.

I've saved some good news for the end. You may not be in the lucky line for an inheritance, but likely you're doing the next best thing. Perhaps the better thing. A recent study by ADP Research Institute found that women are more likely to save than men, and they're saving a higher percentage of wages. If you see yourself in this figure, you go girl!

 

Karen Telleen-Lawton serves seniors and pre-seniors as the Principal of Decisive Path Fee-Only Financial Advisory in Santa Barbara, California (http://www.DecisivePath.com). You can reach her with your financial planning questions at  This email address is being protected from spambots. You need JavaScript enabled to view it. .


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