Some strides have been made toward gender equality since women won the right to vote in 1920. But men and women aren't exactly equal when it comes to retirement.
Women are more likely than men to spend their golden years in poverty. According to a report from the Women's Institute for a Secure Retirement, more than one in 10 women in retirement live on less than $10,000 a year.
The reason is attributable to financial physics: Women earn less than men over their lifetimes and live longer.| More from Bankrate.com: • Retirement Planning in Your 20s • Buy Stocks When They're Cheap • Workplace Retirement Plans Help You Save |
"This is not a complicated picture. And it's not a pretty picture," says Jim Toedtman, editor of the AARP Bulletin.
Women Are Risk Averse
It's not that women don't worry about retirement. A recent study from the Society of Actuaries, "Risks and Processes of Retirement Survey Report," found that women are more anxious than men about that time of their lives.
"The actuaries found that women are more concerned about the risks," says Anna Rappaport, consulting actuary and chair of the Society of Actuaries' Committee on Post-Retirement Needs and Risks. "Fifty-seven percent of women are concerned about being able to afford long-term health care compared to 47 percent of men."
"In general, the male clients I see a lot of times just think that whatever it is that they want to achieve, they can do it. When I'm dealing with women, they don't have the self confidence to think that they can actually do it," she says.
Her experiences may be generationally biased though, she says. "The clients that I see this in are a little bit older -- maybe in their 60s or 70s."
Women Are Too Giving
In many respects, retirement planning for women looks the same as retirement planning for men.
"There are no special mutual funds for women. There is no insurance policy for women.
"The difference is the need," says Patrick Astre, Certified Financial Planner and author of "This is Not Your Parents' Retirement." "We find that women have a greater need to engage in financial planning than men."
Certain characteristics endemic in the female population conspire against them when it comes to investing. For instance, they tend to take care of everyone else in the family before considering their own needs.
As an example, says PNC's Silverman, "Women are more likely to feel like it's more important to save for their children's college."
Rappaport concurs. "When they are taking care of kids or parents, they are probably quicker to say, 'I will use the money for someone else and not use it for myself.'
"We are not saying that women should think about going to the beauty salon, but saying, 'Think about your long-term security and retirement and make sure you have resources for your retirement,'" she says.
Women Are Disadvantaged at Work
Cultural forces don't favor women in the retirement savings arena either.
"Women make less money than men. It's unpleasant, but a fact of life," says Astre. "There is also a glass ceiling; women often don't get as many promotions as men."
Whether women are paid less than men due to poor salary negotiating, career choices or institutional biases, the end result is that they not only have less to save but their Social Security payout is less. They put in fewer years at work and lose out on years of paying into a pension or defined contribution plan.
On top of everything else, most women have children during vital career-development years.
"If you drop out of the work force to take care of children, that is probably going to be a time in your late 20s or early to mid-30s, when your male colleagues who stay in the work force are getting promotions and climbing the ladder," says Ginita Wall, CPA, CFP and co-founder of WIFE.org, a nonprofit organization dedicated to providing financial education to women.
For women who choose to take time out to raise children, losing those working years means that they return to the work force at the same level they were at years before, maybe even with obsolete skills -- putting them further behind in their careers and savings.
Also, in investment matters, women are risk-averse by nature.
"That means you'll be earning less and will have lost crucial years that you could have been adding to your 401(k) and earning years of service that would get you a higher return," Wall says.
Women Are Stuck With More Chores
Women who continue to work while caring for children often find themselves in the unenviable position of being the babysitter, house cleaner, cook and laundress in addition to their full-time jobs. And that leaves less time to contemplate investments or retirement planning.
Astre had a couple as clients who had differing levels of involvement in their workplace retirement plans. The husband was very involved in his, while the wife had no idea where her contributions were going.
"In my office, she turned to her husband and said, 'You get home from work, you sit on the couch, open a beer and that's the end of your day. I've got to make dinner, do the laundry, take care of the kids and go shopping,'" says Astre.
"And it's true. Meanwhile I felt guilty -- that's what I do at home."
Women Are Short on Savings
Even though women today have more opportunities to guide their own financial ships, not all are taking the helm. Research and anecdotal reports from financial planners report that many women, whether single or married, are not adequately preparing for their own retirements.
A study from the Retirement Security Project, "Retirement Security for Women: Progress to Date and Policies for Tomorrow," compared the retirement accounts of men and women and found that women's accounts reflect about half or less of the balance of men's accounts on average.Page 1 | 2
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