Last Updated: May 11, 2009
Women remain at a higher risk for retirement insecurity as compared to men, according to research recently published by the National Institute on Retirement Security (NIRS).
Women, according to the report, "Shattering the Retirement Glass Ceiling: Women Need a Three-Legged Stool," need to accumulate more retirement assets than men because they often live longer. However, acquiring enough assets is more difficult because women still have lower wages and less access to retirement plans during their working years as compared to men.
According to the research, the risk of retirement insecurity can be reduced with the combination of a traditional pension, supplemental 401(k) type individual savings and Social Security. Still, a woman with a salary of $50,000 must save $1,000 more per year than her male counterpart to achieve equitable retirement income because of her longer life expectancy. Yet that might be hard to do according to a 2007 study: Full-time female workers made just 76.2 percent of their male counterparts' wages — that means less money for savings.
To be fair, both men and women need to save more for retirement, said FPA board member, Karin Maloney Stifler, CFP®, of True Wealth Advisors, LLC. Men and women also need to take more responsibility. "Women and men can both choose to make long-term financial security a higher priority," she said.
But women are worse off. "Unfortunately, it is a reality that women are less prepared for retirement," said FPA member, Stacy Schaus, CFP®, PIMCO Senior Vice President and Defined Contribution Practice. "We also know elderly women are also far more likely than men to fall below the poverty line."
FPA board member, Deena Katz, CFP®, an associate professor at Texas Tech University, also agrees with the study's results that women are worse off and need to save more. "The demands on a woman's resources post retirement are far more dramatic than a man's," she said. For example, women are the primary caregiver for parents. The average age of widowhood is 56, and over 60 percent of marriages end in divorce. (Besides saving more, women do in fact need to plan for the possibility that they will be alone during their lifetime, Maloney Stifler said.)
"So, a woman's ability to prepare financially for retirement is significantly hampered, while her need for the resources at retirement are generally more," Katz said. "I'd say forget the three-legged stool and plan on a big sturdy four-legged chair that includes an expectation of needing double the personal savings."
Women might want to take a "me-first" approach when it comes to planning for retirement. "Like pulling down the oxygen mask in a bumpy plane ride and then helping others, women would be well served to look after themselves when it comes to saving for retirement," said FPA board member, Bonnie Hughes, CFP®, of The Enrichment Group.
Said Maloney Stifler: "One of the unique challenges many women face in planning for their financial future is a tendency to care for others before they care for themselves. Many women put their own well being, financial and otherwise, on the back burner while tending to other's needs first."
Maloney Stifler said, "women make huge financial sacrifices to care for children, partners, parents and others. "Women need to know that it is not selfish to make self-care a priority. Self care includes investing in skills and careers to remain employable, to save for retirement long-term before paying for the children's "wants", to maintain good health and to boost financial literacy so they can make wise decisions about the money they do have. Being financially secure is part choice and part
luck (good or not so good), but it is undoubtedly one of the best gifts we can give to ourselves and to the people we care about most."