When it comes to retirement planning, American women often face a unique set of problems. And those problems can threaten to leave many women short on savings, and, thus, in danger of running out of money in retirement.
Those problems are meticulously outlined in a new report, “Sixteen Facts About Women’s Retirement Outlook,” from the 16th annual Transamerica Retirement Survey of American Workers1.
“Women in the 21st century are better educated and enjoy career opportunities that our grandmothers’ generation could only dream about,” according to the report. “However, even now, a woman’s path to a secure retirement is filled with obstacles, such as lower pay and time out of the workforce for parenting or caregiving, which can negatively impact her own long-term financial prospects.
“This year, 2016, marks the 11th consecutive year that the Transamerica Center for Retirement Studies® has published research showing that women are at a greater risk of not achieving a financially secure retirement compared to men.”
According to Transamerica, only 12% of women are “very confident” in their ability to fully retire with a comfortable lifestyle, compared to 16% of men. Forty-six percent of women are “not too confident” or “not at all confident” compared to only 36% of men.
Also, 56% of women plan to retire after age 65 or do not plan to retire. And 51% of women plan to work after they retire.
The problems facing women in retirement are long-standing and many are inter-related. Among them:
Longevity. Life expectancy for women is 81.2 years; for males, it’s 76.4 years. That difference of 4.8 years is the same as in 2011, according to a report on mortality in the USA from the Centers for Disease Control and Prevention’s National Center for Health Statistics.
“It can be a blessing and a curse that, statistically, women live longer,” says Alicia Lewis, president of Layman Lewis Financial Group in Loveland, Colo. “Because they are often paid less, not only do they have a longer retirement, but they also have less money to make work for them, which is really unfortunate. But it is what it is.”
Women earn less and spend more time out of the workforce. Women typically earn less than men in the workplace. They also tend to spend more time in and out of the work force and working part-time because of child-care responsibilities. Because of all those interrelated issues, the result is that women often end up paying less into Social Security (and receiving less in their monthly benefits) and saving less in company-sponsored plans like 401(k)s and 403(b)s.
Dave Evans at Evans Financial in Shreveport, La., says another problem that married women may face is when her spouse has been fortunate enough to have a pension, but did not choose the survivor option. With a pension, people often select the single life pension option because the monthly benefit is higher. But when then pensioner dies, the spouse gets nothing.
“When the spouse dies, the income can be cut in half or possibly something more drastic than that,” Evans says. “We tell people if you take the income stream (from a pension), you should consider doing it with survivor benefit for your spouse. Even if there is no difference in age, according to statistics, she will survive you by at least 3 years. And you probably don’t want her income from the pension cut down to nothing because of the way you have it set up.”
He says he also sees a lot of women who don’t understand Social Security and the options – that they can take their own benefits or 50 percent of their spouse’s, whichever is higher.
“We are in chauvinistic world,” he says. “Men have typically been the higher breadwinner. If it is a single person and they don’t have breadwinner supporting them, their lifestyle is cut down. Their monthly Social Security income is cut down.”
He say he sees women who are 72 years old and have to keep working because they are living on their Social Security Check and their paycheck. They have neither a pension nor a 401(k) plan.
“The number one fear of people in retirement is having more life than they do money,” Evans says. “Women have same concerns except, they live longer.”
Lewis says her firm keeps all that in mind when working with female clients.
“We are making strides in that that hopefully it won’t be like that forever,” says Lewis. “We do everything we can to make sure that with every single cent, every single penny they have saved, it is being used strategically. It’s about having a strategic plan as to when to take income, how to take Social Security, how to maintain all the money you save and not put it in whims of market.
“You must have a plan that will get you to retirement, all the way to if you live to ripe old age of 109,” she says. “One of the ways that we can help you with that is through the use of insurance products, like annuities, that offer a guaranteed* source of income.”
By contacting RetirementHQ, you may be offered information regarding the purchase of insurance products. All of our financial professionals are licensed insurance agents. Additionally, some individuals may also be registered with a broker/dealer or as an investment adviser. Our financial professionals do not offer estate planning, tax or legal advice. Always consult with a qualified advisor concerning your own situation.
*Product guarantees are backed by the financial strength and claims-paying ability of the issuing insurer.
1 Collinson, C. (2016, March). Sixteen Facts About Women’s Retirement Outlook…and Eight Steps to Improve It. Retrieved from https://www.transamericacenter.org/docs/default-source/women-and-retirement/tcrs2016_wp_womens_retirement_outlook.pdf