Women (and Those Who Love Them): Be WISER About Retirement

Dear Friends,

If you are a woman, then you should visit the following Web site: http://www.wiser.heinz.org/portal. If you are not a woman, but you love one, then do her a favor and send her the link.

On the home page for “WISER,” the Women’s Institute for a Secure Retirement, one can find “What Women Need to Know About Retirement,” a new publication that is only available as a free, downloadable e-book.

WISER is one of the non-profit organizations funded by the Heinz (as in “ketchup”) Family Philanthropies. It was founded in honor of the late Pennsylvania Sen. John Heinz, who died in a plane crash in 1991. As his widow, Teresa Heinz Kerry, writes in the forward:
"Today, as the start of the 21st century, when a woman decides to take her finances into her own hands, and to provide for a secure and comfortable and dignified retirement, she is confronted with having too many complicated choices and many difficult decisions …This book and its authors are here to tell all working women two important things: First: You Can Do It. Second: You Are Not Alone."

The fact is, despite the tremendous financial progress made by women in the past four decades —more entering the paid workforce, improvements in pay parity, increased knowledge about money and investments — a surprisingly large number of women find themselves in financial jeopardy once they retire.

The reasons are myriad: Yes, more of us have jobs, but either for children or adult care-giving reasons many of us work part-time or leave the workforce completely for several years. During this period our income is either greatly reduced or non-existent. Moreover, those in part-time positions rarely have access to a company-sponsored retirement savings plan. This combination leaves us receiving less income in retirement.

Women holding full-time jobs are earning more than in the past. However, on average women still receive 77 cents compared to every dollar earned by men who work 40 hours per week. This makes it harder to save for the future.

Ironically, a woman needs a larger retirement nest egg than a man. That’s because she’s likely to live longer. According to the Society of Actuaries, a 65-year-old man has a 1-in-4 chance of reaching age 92, while a woman the same age has a 1-in-4 chance of reaching age 94.
Longevity means we have to be prepared to provide income for ourselves for more years.

As WISER President Cindy Hounsell points out, “Walk into a nursing home and who’s there? Women. Living longer increases the chances of illness.”

If they are married, they will probably out-live their spouses, which means in their later years, most women are alone. After caring for their husband’s needs until he dies, many women find their finances are depleted and there is no one left to take care of them.

In that situation, they have little choice but to enter a nursing home that accepts Medicaid. “A lot of them could have stayed at home [and lived out their lives] if they had had some money and some help,” says Hounsell. “It’s not their fault. They just don’t know.”

This e-book is meant to be both a source of information and a wake-up call.

You’ll find information in such things as: What is a stock? How do stocks make (and lose) money? How does the death of your spouse impact your retirement income? What’s covered under Medicare Part A and Part B? Important questions to ask before buying longterm care insurance.

Maybe you’re in your 30’s, 50’s or even 60’s and feeling as if you’re managing your finances just fine. You’re still healthy, traveling and very active, and your income is covering your expenses. What’s the worry?

“When you’re in your 70’s stuff starts to fall apart,” says Hounsell. “It becomes harder to do everything. Your needs when you’re 77 are not the same as when you’re in your 50’s.”

And neither are your expenses.

WISER’s advice to women of all ages: “Plan. Prepare. Assess.”

Be aware that with fewer companies providing guaranteed pensions, you’re going to have to fund much of your future with savings you set aside today. The key is to start.

Contribute as much as you can to your employer’s retirement plan or an IRA. Increase this over time. As “What Women Need to Know About Retirement” points out, retirement nest eggs are not created over night: "How do you eat a huge meal? One bite at a time. How do you make a long trip? One mile at a time."

Speaking personally, the critical thing for women to understand is that it’s never too late to start saving. Having some money is better than having none. The greater your financial resources in retirement, the more choices you have — where to live, whether and how to travel, what you eat, activities you can participate in, what health care providers you can see.

Just ask your mother. A recent WISER-MetLife survey called “It’s Not Your Mother’s Retirement,” looked across two generations, comparing the attitudes of women who are already retired to those who are approaching retirement, presumably those their daughter’s age. (You’ll also find this on WISER’s home page.)

As we’ve seen in other studies, it confirmed that the retirement plan for tomorrow’s retirees increasingly boils down to “keep working.” While three-quarters of the women in the “mom” generation quit work by age 65, only 37 percent of the “daughters” expect to do so. In fact, 17 percent of the pre-retired women don’t expect to leave the workforce until they are at least age 70, which, given improvements in health, may not be unrealistic — provided you can find a job.

Both generations agree that for those in the “daughters” generation, retirement will be much more active time than it has been for the “mothers.” The two age groups also say that one of the biggest challenges is/(will be) maintaining their health in retirement and paying for medical care.

While nearly 30 percent of the “mothers” say they did not have to reduce their spending when they retired, both generations expect that the free-spending baby boom generation will face a rude awakening. More than a third of pre-retired women expect their “biggest financial adjustment at retirement will be living on a reduced income or budget.”

Also weighing on their potential standard of living is the fact that “daughters” are likely to enter retirement with a larger debt burden than those in the “mother” generation.

When asked what piece of retirement advice “mothers” would most like to give “daughters,” the top three answers were:

“Save more money”- (27 percent)
“Don’t live beyond your means”- (9 percent)
“Plan for the unexpected”- (9 percent)

Good advice. Matter of fact, you might want to download this information for a few men in your life!

All the best,

If you have a question for Gail Buckner and the Your $ Matters column, send them to: yourmoneymatters@gmail.com, along with your name and phone number.