Thursday, March 14, 2013

Retirement Challenges For Women

I found this story at  LodeStar Advisory Group, LLC.® . They claim to be an independent  Wealth Management firm. Their site has a newsletter that you can subscribe to as well as links to good information. The information is geared to an American audience, but I think the information may be useful to others as well.
Women generally live longer than men, which means additional years of retirement need to be financed.  But studies show the average woman continues to have lower earnings and less retirement savings than men, which causes women to have lower income and a lower quality of life in retirement, especially if they become widows.
Here are some significant retirement challenges women face:
Longer life expectancy.  A man reaching age 65 this year can expect to live to an average age of 83, while a woman the same age can expect to live until 85, according to Social Security Administration data.  But those are just averages.  A quarter of 65-year-olds are expected to live past age 90, and 10 percent will make it to at least age 95.
Lower earnings.  Despite their economic gains, women continue to have much lower lifetime earnings than men.  Over the last decade, the median income of women age 65 and older was approximately 25 percent lower than among their male counterparts.
Failure to take advantage of retirement benefits.  Women are now more likely than men to work for an employer that offers a retirement plan.  However, women continue to be less likely than men to be eligible for and participate in a retirement plan at work.  Some women are not eligible to participate in a retirement plan because they do not work enough hours, weeks, or months per year.
Widowhood.  Since women generally live longer than men and tend to have older husbands, they often spend the final years of their lives as widows.  Some 70 percent of women age 85 and older, were widowed, compared to only 24 percent of men age 85 and older.  Because women have longer life expectancies and often marry men several years older than themselves, periods of widowhood of 15 years or longer are not uncommon.  For many, the death of a spouse is accompanied by a decline in the standard of living.
Failing to maximize Social Security. Women generally receive a higher proportion of their retirement income from Social Security than men.  It's especially important for women to maximize the amount they receive from Social Security.  Married women should additionally coordinate claiming with their spouses to increase spousal and survivor's payments.
So what can you do to manage these challenges?
Take the time to understand your finances.  Once a year conduct a retirement analysis. Look at what you own, your spending needs and determine if what you have is going to cover those needs.  What may seem like obvious advice is a crucial step for women to take in ensuring quality of life in retirement—both with her spouse or after she is on her own.  Single women, of course, are on their own, which only increases their responsibility at making retirement planning a priority.
Another issue that must be considered concerns the death of a spouse.  There are probably going to be an awful lot of women who are left as widows with social security as their primary income.  Every woman should look into social security maximizing strategies.  Even if the husband is the higher earner, claiming early is going to drive down his wife’s widow’s benefits upon his death. The later he claims social security, the higher her monthly income will be once she’s on her own.
Working a little longer, maximizing retirement contributions and optimizing social security benefits will go a long way towards helping women ensure a comfortable retirement

No comments:

Post a Comment