Retirement funds are a bigger worry for women investors, who face higher longevity risk. How can they make retirement secure?
Retirement funds pose a greater concern to women, who tend to worry more than men about personal finances and the financial well-being of their children and grandchildren.
“Women consistently express a higher level of concern about household financial issues, including having sufficient retirement funds,” said Catherine McBreen, president of Millionaire Corner. “They are also more likely to worry about health issues affecting the family, and the financial stability of their children.”
Women investors surveyed by Millionaire Corner in December list having enough money set aside in retirement funds as a top financial concern. Nearly 75 percent of women investors with $100,000 to $1 million in assets worry about their level of retirement savings.
These concerns are founded in fact. Older women are more likely than older men to live in poverty or near poverty, according to federal data. The 2007 Current Population Survey shows that more than 10 percent of women age 65 and older lives in poverty, compared to 6.6 of men in the same age group. Nearly 25 percent of older women are near poor – defined as having an annual income of $15,434 or 150 percent of the poverty threshold – compared to about 14 percent of older men.
Retired women are at greater risk for poverty because they are more likely to have stopped working to take care of children and other family members, according to the Women’s Institute for a Secure Retirement or WISER. The interruptions mean that women earn less than men, are less likely to have retirement accounts and have contributed less to retirement funds.
Women are also more likely than men to spend money on household expenses and to support their children. Women investors participating in our December survey were just as concerned about the financial situation of the children and grandchildren as they were about their own retirement funds. A pattern of putting others’ financial needs first erodes the ability to save for retirement.
“Longevity risk” – the risk of outliving one’s savings – is also higher for women because, on average, they live five years longer than men, said WISER. Widowhood – as well as divorce – can create additional financial hardship for women in retirement. A surviving spouse will not receive her deceased husband’s full Social Security benefits, and pensions and other retirement funds are not automatically split in a divorce. To increase the chances of a secure retirement, WISER encourages women to take full advantage of all retirement benefits available to them in their workplace and to make regular contributions to retirement funds, including 401(k)s and IRAs.