Why Women Are More Likely to Retire Poor Than Men (And What They Can Do About It)

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When it comes to retirement planning, many women have a distinct disadvantage compared with men.

The U.S. Department of Labor says we’re more likely to work part-time jobs that don’t qualify for benefits like a 401(k). Of the 62 million working women in the country, only 45 percent participate in a retirement plan, the department says.

We’re also more likely to quit jobs to raise children or take care of a family member. We’ll probably work fewer years than our male counterparts, meaning we’ll likely get fewer raises and earn lower pay. That means less money to put away for retirement.

Add to that the fact that women on average live longer than men, and you’re looking at a retirement shortfall. In a recent survey, half the women said they were worried about running out of money in their later years, says U.S. News & World Report.

Money Talks News founder Stacy Johnson has suggestions about how women can boost their retirement funds. Check it out, then read on for more advice.

1. Map out your future

Creating a visual road map for your future will make retirement planning easier. To get started, ask yourself some questions:

  • When are you going to retire? At what age do you want to stop working? If you’re married, will you want to retire when your husband does? Will you need to stop work early to care for an aging parent?
  • Do you plan to take time off from work? Many women drop out of the workforce to raise children. If that’s your plan, remember that you’ll likely end up making less money over the course of your career as a result.
  • What do you want to do in retirement? If you plan to travel, you’ll need more money than someone who intends to stay close to home.
  • How much money will you need? Online calculators can help you out. Check out these calculators from CNNMoney and AARP.

2. Assess your situation

Once you have some firm ideas about your future, let’s see how prepared you are so far.

  • Are you saving? If you’re not regularly setting aside money in a 401(k) or IRA, start now.
  • How much savings do you have? And how does that compare with the amount you’ll need to support the retirement you want? Will your current rate of saving reach that goal? This calculator from MSN Money will help.
  • How much debt do you have? Ideally, you’ll want to be debt-free when you retire.

3. Close the gap

You have to figure out how to come up with the extra money if your current savings plan is inadequate.

  • Track your spending. Are there expenses you can cut so that you can divert those funds to your retirement accounts? Do you really need cable TV? Do you need to live in such a large house?
  • Retire the debts. Try a debt snowball if you have a lot of debt on credit cards. Can you do a balance transfer to a card with an introductory 0 percent interest rate? Stacy has advice about whether to pay off debt or save for retirement first.

4. Maximize Social Security

There are ways to maximize what you’ll receive from Social Security. One way is to put off collecting Social Security until you’re age 70, which will increase the amount of your monthly benefit. Many people opt to take Social Security early, at age 62, which reduces the monthly payment they’d otherwise receive if they had waited until at least their full retirement age.

5. Participate in work-related retirement plans

If your employer offers a 401(k), contribute the maximum amount possible if you can. The contribution limit for 401(k)’s is much higher than for an IRA — $17,500 for a 401(k) and another $5,500 if you’re 50 or older vs. $5,500 plus another $1,000 for older workers for an IRA. If you’re self-employed, consider a solo 401(k).

6. Factor in your spouse

For instance:

  • If your husband has a traditional pension, make sure it will continue to make payments to you if he dies before you do.
  • If your husband has a 401(k) or similar plan at work, the money will automatically go to you upon his death unless another beneficiary has been designated.
  • If you’re not working, make sure your spouse is contributing to an IRA on your behalf.
  • Remember that if you’re divorced, you may be entitled to a percentage of what your former spouse collects from Social Security. (His payment won’t be reduced as a result.)

Finally, take care of your health. Since you’re expected to live longer, you’ll have a longer time to pay expensive health care costs if you develop chronic conditions like diabetes.

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  • Greg

    Gee, more part time work, fewer years working and guys die younger….lets put this a different way. Men work longer hours, for more years, supporting their wives and then when they retire they die much younger. I think this article is feeling sorry for the wrong person.
    As long as the husband is alive, she’s got a great life…he dies, she has it tougher. My heart’s not bleeding, she had a lifetime of being taken care of by a man who died younger.

    • Dale

      Excuse me – have you noticed it’s the 21st century?? Once your badly needed time machine arrives, Greg, perhaps you’ll see that the majority of women today work OUTSIDE the home (as well as more hours ‘inside’) than men.

      So Mr. Peabody, as well as the author if this article, maybe you could both acknowledge discrimination in the workplace against women – which is a major contributor to women’s lower wages.

      There still seems to be a presumption in corporate America that all women WANT to be married and have children. I’m not married nor do I have children and have never wanted either. But my wages are low because of this corporate prejudice.

  • Ceunei

    I remember the days when 401(K) applications were ignored in the ’90’s! Mine was one of them. I was also one of the first hired that wouldn’t get a pension, either. This was a multinational million dollar company at the time…I won’t even go into the wrestling I had to go through to get on that healthcare plan…

    So, that was my only chance at a 401(K)…and…I’m under the age the neorepublicans consider allowed to access Social Security…even though I already got 20 years paid in…so…whatever…can’t even use my worthless employer negotiated healthcare package, and, I had to get married to get one of those, too.

    Way to go my Elders for setting this up so well for the future of your kids (my peers) and your grandchildren. I’m really impressed by the excellent parenting and family planning that has allowed for such entitlements to be enjoyed by those under the age 45. Way to go Gen Boom. Way to go Gen WWII & whoever remains of the generation before that…WAY TO CARE! I’m still continuing my transformation into Corporate Citizen. Then, I won’t have to care when my Elders end up on the street due to their selfishness and lack of caring for the future…just like a Corporate Citizen…Just like I will be in 4…3…2…1…