Women & Retirement Finances – A Rocky Road Ahead? By Bob Lowry

By Bob Lowry

This post originally ran on Bob’s blog four years ago, but is still relevant today:

A comment left on a post a week or so ago asked if I’d explore the important subject of women and retirement finances. Since I am not a financial planner or expert, I have included some links at the end of this post to sites that you might find helpful. But the topic is important enough for me to do some basic research and pass along what I have learned. 

Building a financially satisfying retirement is more difficult for the average older woman for many reasons. Gender roles, lack of training in basics of investing, and a lack of confidence are all contributing factors. A depressing fact is that one in five women will live in poverty during her retirement. Also true:

*While working women earn less. Obviously that affects the amount available to save and invest, the size of any company pension, and the amount of a monthly Social Security check. So, what is to be done? How can women prepare for and thrive during retirement, married or single, widowed, or divorced?
*Women spend less time in the workforce. On average, females spend 10 years out of the workforce while raising children. Men average less than one year. There is a direct correlation to lifetime income.

*Women are less likely to have retirement plans. Again, because of less time in the workforce, or primarily involved in part-time work, fewer have actual retirement plans from their employers. 

*Women have lower Social Security benefits. The average social security check for a woman is $800.00 per month and for a man it is $1,200.

*Women live longer. The typical woman will live an average of 6 years longer than a man. That puts additional pressure on her retirement savings and investments to fund several more years. 40% of women living alone depend on Social Security of all their income. 

*Divorce can have a devastating effect on retirement. Because of the over-reliance on the husband’s pensions and Social Security checks, divorce can leave a woman in a serious financial bind.

So, what is to done? What can a woman (or a man) do to improve the odds that a financial crisis isn’t part of her (or his) future? Here are some common sense suggestions for you to consider:

  • Become educated on financial basics. The good news is that once comfortable with the hows and whys of various investment options, women tend to be better investors than men. They make less risky choices, are more likely to admit a mistake and move on, and tend to know what they don’t know. Resolve to learn one new financial fact every week.
  • Train yourself to be financially independent. Be aware of the finances. Even if your husband or partner is handling the money know what is happening. Stay involved. 
  • Fund your retirement account regardless of Your age. For younger women, retirement seems eons away. Put in as much as you can, especially if your company matches funds. Otherwise you are leaving “free” money on the table.
  • Don’t fear reasonable risk. If all you do is protect your capital instead of making it grow, inflation will put you farther and farther behind. Liz Perle, author of Money, a Memoir put it well when she said women perceive their investments like a lake, that is a finite resource. Men tend to look look at it as a river that is constantly renewing itself. Liz says consequently, “women are afraid to risk.” Educated risk is not the same as speculative risk.
  • You don’t have to do all this alone. There are plenty of investment groups and clubs that will help you learn and share ideas with others. The local library and the Internet contain a wealth of information and resources. Here are a handful of web sites that provide an excellent overview along with specific steps anyone can take to become more comfortable in managing finances.
 


Doing the background work for this post helped open my eyes to the unique challenges many women face in protecting themselves financially. Like so many parts of a satisfying retirement journey it boils down to taking charge of this part of your life. Learn what you need to know, have faith in your abilities and abilities, and constantly adjust and improve your financial plan.

by Bob Lowry

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