By Anna D. Banks, GCDF
While planning for retirement is essential for everybody, it is especially imperative for women. For example, although it is a huge undertaking for everybody to save money for retirement, the challenges and obstacles faced by women are varied and unique, which need to be considered while planning for their post-retirement life.
One of the most important factors to take into consideration is that women, on an average, have longer lives than men by about six years. This means, that compared to men, they will require extra money for their retirement. According to some studies made by demographists, most baby boomer women who are approaching their retirement age are expected to live well into their nineties. This implies that women will have to prepare for emotional and financial security during a retirement that could last more than thirty years, in many cases.
Another challenging factor typically faced by many women is spending less time in the work force. Studies show that on retiring, men put in 44 years of work on an average, while women account for just 32 years. The reason being that it is women who usually take a break from their careers to have and take care of their children, and sometimes even to look after aged parents.
Interruptions in the working life of women have important consequences financially. For example, when women stop working their Social Security contributions cease, which reduces their benefit from Social Security on retiring. It has been found that while men get $1008 per month as Social Security benefit on an average, women get just $774.
Interruptions to women’s working life also results in making it harder for them to compete for raises in the salary and promotions. It is for this reason, along with others, that on average women are currently paid about 87 percent of men’s pay on an hourly basis.
According to the Women’s Institute for a Secure Retirement, women get about 50 percent less as pension compared to men. And even though they may be qualified to benefit from the pension schemes of their husband, these can decrease dramatically if the husband dies before the wife.
Besides, according to estimates made by the Securities Industry Association, as a consequence of various factors like women marrying later, increased rates of divorces and becoming widowed, women will usually spend more of their adult life being on their own financially.
Because of fewer working years and lower incomes, it is less likely for women to save for their retirement. According to surveys, compared to 65 percent of men saving for their retirement currently, only 59 percent women are doing it. This study also reveals that compared to 48 percent men who take part in retirement plans at the workplace, like 401(k), just 36 percent women do.
On top of all that, compared to men, women tend to invest more conservatively. Women, it has been found, have a lower tolerance for risk, which is why they have a tendency to invest more conservatively. Even though it may be wiser to invest more conservatively in many investment portfolios, being too conservative results in less savings and reduced investments for retirement.
Although women in America have made considerable gains socially, economically and legally in the past few decades, their working patterns and caring responsibilities still result in placing them at considerable disadvantage in the country’s system of retirement.
© 2008 Anna D. Banks, GCDF
Do you have any questions about career development or lifestyle changes for Baby Boomers, which you think others, like you, would want to know the answers? Email your questions to me at Anna@AnnaBanks.com.