Why aren't women saving as much for retirement as men?

by Jim Sloan

Women live longer than men, and studies show that they spend more years in retirement than men do. At the age of 65, most women will be expected to live another 20 years, while men will live just a little over 17 years. What's more, most women will retire at age 61, and demographers are predicting that many of them will survive into their 90s.

So is there a discrepancy between men and women when it comes to saving for retirement?

Savings lag behind men

Not only do women typically earn less--according to the White House National Economic Council, women in 2010 earned an average of 77 cents for every dollar earned by men--also but just over half of women are saving for retirement compared to 62 percent of men, according to MSN.

It's also true that men set higher savings investment goals for retirement than women. According to a recent Well Fargo and Harris Interactive survey, men strive to have investments of $400,000 for retirement while a woman's goal is only $200,000. To make matters worse, women are slightly less likely than men to be offered retirement benefits at their job.

The Wells Fargo survey also found that women are aware of the problem with their savings accounts; they are less confident in their investments for retirement, and a majority of them are "unsure or unrealistic" about what their annual withdrawals from their savings accounts should be in retirement. Also, they are leery of using the stock market for their investments.

The result is that women are 71 percent more likely than men to live below the poverty line in retirement, msn.com said.

Women lack confidence in stock market, Social Security

Here are some other findings from the Wells Fargo survey:

  • Just over half of women feel confident that they have enough in their savings account and investments for retirement. Women are less likely than men to believe Social Security will still be around when they need it.
  • On average, women have saved just $20,000 for retirement--$5,000 less than what men have saved.
  • Nearly 30 percent of women between the ages of 40 and 69 aren't sure how much they'll need to take out of their retirement savings each year during retirement.
  • About 27 percent of women are confident in the stock market, compared to 40 percent of men. About 40 percent of women said they would purchase a CD account rather than invest in the stock market, but only 30 percent of men said they would forsake the market in favor of a certificate of deposit.

Wells Fargo noted that even though the ratio of women in college to men in college is 3 to 2, and that women hold more than half of the high-paying management jobs in the U.S., when it comes to investments and retirement planning, "they lag in their confidence about how to prepare for this phase in life."

Women are apparently aware of the need to be more aggressive about investments, savings accounts and planning for their own retirement. A separate Wells Fargo study found that retirement is the top financial topic women want to learn about. Still, the survey found that women in their 40s were the most likely of all respondents to have reduced their retirement savings accounts since the recession started. They were also the most likely to claim that they can't save more due to other financial priorities.

Women want more help with retirement investments

Women, according to the Wells Fargo survey, were much more in favor than men in proposals that would encourage retirement savings. More than 80 percent of women felt employers should help their workers manage retirement savings. Single women were most enthusiastic about that idea, particularly women in their 20s and 30s.

Three out of four women surveyed felt the government should provide a universal savings vehicle for those who don't have a 401(k). Single women were most supportive but married men were the least supportive of that idea.

Paying too much for your 401(k) plan? Here are 6 steps you can take to fix it

by Jim Sloan

A lot of people feel lucky if their employer has a 401(k) plan. 401(k)s are a great way to save for retirement and to monitor your investments, but if your employers' plans carry fund fees and administrative charges that chew up too much of those investments, you should bring it to you company's attention and try to get it changed. You have options.

401(k) fees: Who charges them and who is hit hardest?

According to Neil Weinberg of Forbes magazine, about 66 percent of the workers in the private sector have a 401(k) account--about 40 million people. That number is up from 20 percent in 1980. Many private companies hire someone--such as Fidelity or Vanguard--to run the 401(k)s they offer their employees, but Weinberg says many smaller companies have "subpar" offerings with 2 to 3 percent fees that can soak up about half of an employee's investments' return.

According to Forbes.com, the average total cost of plans with fewer than 100 participants was 2.03 percent. Forbes says both large and small companies should be able to design high-quality plans that cost less than 1 percent of the plans' assets annually. The secret is using index funds and set recordkeeping and administrative fees, rather than fees based on a percentage of the assets.

6 steps to take to fix your 401(k)

Here are some ways you can assess the value of your company's 401(k) plans and suggest ways to improve it:

  1. Study the plans options. Examine the mutual fund offerings from the 401(k) with online tools that will rate the funds based on market performance.
  2. Find out if the plan has a self-directed brokerage option. This option will still cost you fees and transaction costs, but you will be free to pick your own mutual funds and securities.
  3. Get outside help. Have your own personal financial advisor, if you have one, review the plan and offer suggestions.
  4. Ask questions. It's your money, so you have a right to know how the plan works and why the fees are what they are. If your company has a 401(k) committee, volunteer to be on it.
  5. Request the fine print. All 401(k) plans are required to disclose their investments fees, but those costs are not always very clear. So ask your plan administer to provide the fees deducted from your account for recordkeeping, securities custody and advice, and get it in writing.
  6. Request the plan's benchmarking report. Every few years, big companies often have consultants compare the company's plan to others. Ask for a copy.

Why the fees matter

There have been a number of lawsuits filed in recent years accusing large companies of profiting illegally from their employees' retirement accounts. The federal law clearly states that 401(k) plans must solely benefit workers, not the company, but employees of Caterpillar, Boeing, Kraft, International Paper and several others are still in court accusing their employer of hiding fees or charging too much in fees. In several of these ongoing suits, the fees have been described as "complicated and confusing" or "excessive, undisclosed and illegal," Forbes.com said.

According to Boston College's Center for Retirement Research, small businesses manage 97 percent of the 650,000 401(k) plans in the country. But that $2.9 trillion in assets return 1 percentage point a year less than traditional pension plans. That amounts to $29 billion a year that go toward fees rather than toward your retirement.

According to Weinberg, that whopping fee doesn't really concern small companies because they don't have any skin in the game. It's their employees' money, not theirs.

So it's up to workers to bring about change - by asking questions and demanding that fees are clear and justified.

New banking and investing apps help you manage your accounts on the go

by Jim Sloan

The number of investors managing their investments via mobile devices--such as smart phones and tablets--rose 125 percent in 2010 from the previous year.

Although the total percentage of stock trades conducted via mobile devices is still very small--about 4 percent, according to USA Today--the increasing popularity of the mobile approach has banks and brokerages rolling out new tools and apps that allow you to get stock quotes, monitor your checking account balances and place trades.

On the go money management

E-Trade, TD Ameritrade and Fidelity all have software that runs on Android operating systems, iPhones and iPads, and nearly all major banks and brokerages have a mobile version of their websites that work on these devices.

Although many consumers can manage their various accounts--their checking account, savings accounts and investment accounts--from one bank or brokerage site, others are using third-party sites that bring together different accounts that are in many different locations.

Some of the best third party apps for pulling together these diverse accounts are from Pageonce and Mint.com. Both free apps let you view savings accounts, your checking account and your brokerage account from one view. You can also check your money market account, and look for the best cd rates and savings account rates. They'll also tell you if you're meeting your monthly personal budget--key information if you're hoping to increase the amount your putting into you're savings accounts or money market account.

Pageonce also lets you track the other types of currency that are important in your life--frequent flier miles and cell phone usage.

Although mobile investments were expected to take off 10 years ago, the growing interest has the best banks and brokerages thinking this time around the trend will continue, USA Today said.

Where do I click?

Getting these new apps is a snap. If you want the Charles Schwab mobile site, for instance, you just go to their website and the mobile site will load automatically for you. Other banks and brokerages have unique addresses, including Wells Fargo and E-Trade. According to the Pittsburgh Tribune Review, mobile sites give you're the freedom to do just about everything, from buying and selling stocks to transferring money from your savings accounts to your brokerage account.

Of course, you'll need a user name and password for many of these transactions, although many apps will allow you to check stock prices, money market rates and savings rates for free even if you don't have an account with that particular bank or brokerage.

Not all apps work on every device, but companies say this approach allows them to develop more high-power apps. For instance, TD Ameritrade's iPad app offers a seamless and simple approach to executing complex stock-option trades. But that app won't work with Windows Phone 7. Another example is the Schwab app, which won't work with BlackBerry.

Apps with investor appeal

Although many apps are designed for the average consumer, other apps will appeal to the hard-core investor. USA Today, for instance, provides apps that let you monitor stocks and investments that you're interested in, and Yahoo's MarketDash for iPad gives you stock tracking and stock charts.

The latest mobile investing app to hit the free market is InvestingAnswers, which is available for iPhones, iPod Touches, iPads and Android devices. According to the designers, Digital Kozak, this app explains complex investing topics in plain language. It comes with hundreds of articles, features and tutorials covering investments, trading, analysis and bonds. Its dictionary includes financial terms as well as explanations for common real estate and mortgage terms.

Merrill Lynch also launched a new iPad app this month that lets you move money between Merrill and Bank of America accounts while providing customized watch lists, alerts and the latest market news.

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Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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