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Why Women Need to Embrace Retirement Planning

Many women need to secure their financial futures, study finds


For some reason, the retirement-planning message isn’t getting through to many women.

Just take a look at these findings from Women Let’s Talk: The 12th Annual Transamerica Survey of 1,800 American women workers:

  • Only 8 percent of women say they felt comfortable about their ability to retire comfortably.
  • To estimate their retirement savings goal, 60 percent of women said they “guessed.”
  • Friends and family — not financial advisers or financial media outlets — are the most frequently cited source of retirement planning and investing for women.

I asked Catherine Collinson, president of the Transamerica Center for Retirement Studies, which conducted the survey, what she made of the numbers.

“Relatively few women are talking about retirement planning or using financial websites, the way men are,” she says. “We really need to make retirement planning a big topic of conversation for women.”

Throughout the Transamerica report, the evidence indicates that women aren’t taking retirement planning as seriously as men. Just 7 percent of women have written retirement plans, versus 13 percent for men, for example.

Yet women in their 50s and 60s typically face bigger retirement challenges than men. There are two major reasons for this:

To start with, they’ve typically earned less than men during their careers, and are more likely to have taken time off from work to raise a family or provide caregiving. Both factors have made it harder for women to save as much as men. The average IRA balance is $51,314 for women and $91,063 for men, according to The Wall Street Journal.

Women are also likely to live longer than men — 8 percent longer, according to the MetLife Study of Women, Retirement, and the Extra-Long Life. That means they’ll need to make their money last longer.

Although Collinson believes that it’s “really important” that women discuss retirement planning with friends and family, she says women should also seek expert advice. “It’s like going to the doctor,” Collinson says. “You wouldn’t ask a friend what operation you need. You’d get advice from an expert.”

That could mean hiring a retirement planner, as Next Avenue has written, or taking a class about investing at a community college, or turning to financial websites (the No. 1 source of retirement advice for men).

One bright sign for women’s retirement prospects, reported by Forbes’s Kerry Hannon: A new Urban Institute study found that most boomer women earn their own Social Security benefits and will receive higher benefits than previous generations of women.

Women who haven’t taken retirement planning seriously can start by creating what Collinson calls a “personal balance sheet.” Estimate how much money you’ll need to retire overall and how much retirement income you’ll want each month. The Ballpark E$timate worksheet on our site can help.

“For many women, creating a personal balance sheet is as terrifying as stepping on a scale after a long hiatus,” Collinson says. “It may be painful.”

The next step is figuring out how to bridge the gap between the amount you’re likely to have and the amount you think you’ll need.

Part of the solution is obvious: Start saving more by spending less and putting more cash into retirement accounts. You should also take advantage of the “catch up” rules for retirement savings. If you’re 50 or older, you’re allowed to save $1,000 more in an IRA and $5,500 more in a 401(k) savings plan this year than someone who is younger.

But think bigger: You might want to redefine your entire concept of lifestyle — from the kind of home you live in to how often you splurge for fancy restaurant meals — and make some radical shifts. And I’m not talking about doing this when you retire. I mean doing it long before.

Make sure you keep your job skills up to date, too, so you’ll have an easier time finding part-time work in retirement. As Collinson observes, “A woman who was a crackerjack doing shorthand 30 years ago may find not much of a market for shorthand anymore.”

Collinson has one final piece of advice for women: Talk about the importance of retirement planning with your sons and daughters who are entering the working world. “To me, the most shocking statistic in our survey was that only 11 percent of women in their 20s are very confident about their ability to fully retire with a comfortable lifestyle,” Collinson says. “That’s a call to action for baby boomers to help their adult children avoid replicating their mistakes.”

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