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Bridge the gender gap to become a financially secure female retiree

by Jim Sloan

Mother's Day is an opportunity each year to acknowledge all the sacrifices mom's make. This year, it was also an opportunity for the media to spotlight how women face more difficulties in preparing for a secure retirement than men.

Millions of baby boomer women, many divorced, widowed or never married, find themselves living on their own in retirement. They often arrive at retirement with smaller retirement savings accounts, fewer Social Security benefits, less knowledge of such investments as certificates of deposit and a life expectancy that could have many outliving the resources they need for a comfortable life.

In one of a number of Mother's Day articles this year that focused on the challenges facing women in retirement, Women's Institute for a Secure Retirement (WISER) president Cindy Hounsell told the Associated Press, "there has been progress, but not enough."

Why women face challenges

While it would be stereotyping to suggest that women aren't good savers or remain largely uninvolved in family finances, it is fair to say that they are at a disadvantage to men when it comes to retirement preparation. They typically spend about 12 years out of the workforce raising children or caring for sick relatives, and this leaves them with fewer retirement benefits than men.

Here are three other disadvantages:

  1. The percentage of women living alone over 65 is twice that of men. A single person is at greater risk of living in poverty than a married couple.
  2. Nearly 70 percent of all people aged 85 or more are women, and many are living in poverty or near-poverty because of high out-of-pocket medical expenses.
  3. Women make 77 percent of what men earn, another factor in the smaller amount of Social Security benefits they receive in retirement.

Positive signs

Despite these challenges, surveys by AARP suggest more women are handling household finances. According to the Associated Press, an increasing number hire financial advisors to help them plan ahead.

Here are two other encouraging developments:

  1. Women are more likely to pick a safe investment, such as a certificate of deposit, but an increasing number of groups focused on helping women in financial planning are encouraging them to invest in stocks and other higher-yield savings accounts that will increase their nest egg.
  2. Young people are taking steps to help their older moms organize and assess their retirement documents, such as bank statements for checking accounts, savings accounts, money market accounts and CD accounts.

What you should do

Women reading this can take steps on their own, including these two:

  1. Contribute to your own IRA or other savings accounts. AARP recommends this because your husband's IRA may not be enough or could become depleted because of a long illness.
  2. Invest with purpose. While your investments should become less risky the closer you get to retirement, women should still seek out advice for higher-yield investments, including stocks and mutual funds.

In addition to educating themselves about the best cd rates and money market accounts, women should also take advantage of the advice available to them from organizations like AARP. An increasing number of these groups help women increase their retirement planning and overall financial literacy.


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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