{"id":7645,"date":"2019-07-21T07:28:05","date_gmt":"2019-07-21T11:28:05","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=7645"},"modified":"2019-07-22T09:43:51","modified_gmt":"2019-07-22T13:43:51","slug":"these-women-face-the-greatest-retirement-risk","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=7645","title":{"rendered":"These Women Face The Greatest Retirement Risk"},"content":{"rendered":"\n

Women in their 50s who are at the most financial risk in retirement are those who are married and in two-income households. That\u2019s the surprising news from a recent report on women from the Center for Retirement Research <\/a>(CRR) at Boston College.<\/p>\n\n\n\n

The finding is based on research of women ages 50 to 59. According to CRR\u2019s National Retirement Risk Index<\/a>, 46% of married women in their 50s in two-income households are at risk of being unable to maintain their standard of living in retirement vs. 32% of married women that age in one-income households and 39% of women in their 50s who\u2019ve never been married.<\/p>\n\n\n\n

To be frank, these statistics were somewhat unexpected to me. I\u2019ve spent decades reporting on the challenges surrounding women and money. And I researched the financial vulnerability of divorced and widowed women for my book Money Confidence: Really Smart Financial Moves for Newly Single Women<\/a><\/em><\/p>\n\n\n\n

Why Certain Women Are at Greatest Retirement Risk<\/h3>\n\n\n\n

I\u2019d have thought \u2014 and you might have, too \u2014  that married women in two-income households have a leg up for retirement security over their single, one-income household counterparts. There are, however, several root reasons for the study\u2019s results.<\/p>\n\n\n\n

Read On PBS Next Avenue<\/a><\/strong><\/p>\n\n\n\n

\u201cThere is always a common theme among women and it\u2019s that we don\u2019t put ourselves first.\u201d<\/p><\/blockquote>\n\n\n\n

\u201cTwo-income households typically make more, but save less<\/em>,\u201d says Cindy Hounsell, president of the Washington D.C.-based Women\u2019s Institute for a Secure Retirement<\/a> (WISER) nonprofit and a Next Avenue Influencer In Aging. \u201cThey are living a two-income standard of living and spend more on expenses \u2014 two cars and a bigger house, for instance \u2014 so I\u2019m not that surprised. They\u2019re having a nicer life while it is going, rather than saving for retirement. There\u2019s a bit of denial when it comes to retirement planning.\u201d<\/p>\n\n\n\n

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Cindy Hounsell, WISER founder<\/figcaption><\/figure>\n\n\n\n

Married women in two-income households also often aren\u2019t saving as much as they could in workplace retirement plans.<\/p>\n\n\n\n

In half of the two-earner couples surveyed, only one earner is covered by an employer retirement plan, according to a Prudential Financial report on the CRR study<\/a> (Prudential sponsored the CRR research). And the partner who is covered typically doesn\u2019t increase his or her retirement plan contributions to offset that circumstance.<\/p>\n\n\n\n

Women and Retirement Savings<\/h3>\n\n\n\n

The average 401(k) savings rate for one-income households and two-income, two-saver households is typically around 8% to 9% of household earnings, CRR says. But the average savings rate for two-income, one-saver households, it found, is only 4.9% of household earnings.<\/p>\n\n\n\n

A new T. Rowe Price 401(k) survey<\/a> said that boomer women have a 401(k) savings balance of $59,000, much less than half of the $138,000 median balance of boomer men.<\/p>\n\n\n\n

The Social Security Trap<\/h3>\n\n\n\n

Two-income households also typically get lower Social Security benefits per tax dollar paid than one-income households, the Prudential report noted.<\/p>\n\n\n\n

\u201cThe spousal benefit generally declines once the second spouse starts working, and disappears completely once the lower-earning spouse\u2019s own benefit exceeds one-half the higher earner\u2019s benefit, Prudential explained.<\/p>\n\n\n\n

Meantime, another new report from the National Council on Aging<\/a> found that 60% of women age 60 and older and approaching, or at retirement, are worried their health care costs will exceed retirement income. And only 62% of women surveyed by Allianz Life<\/a> said they feel financially secure, down from 68% in 2016.<\/p>\n\n\n\n

Put it all together and \u201cthis is a wake-up call for married women,\u201d Hounsell says. \u201cPay attention.\u201d<\/p>\n\n\n\n

5 Tips for 50+ Women in 2-Income Households<\/h3>\n\n\n\n

Here are five ways women over 50 in two-income households can protect themselves from being financially at risk in retirement:<\/p>\n\n\n\n

1. Plan your finances as if you were solo.<\/strong> \u201cI wouldn\u2019t be counting on anyone,\u201d Hounsell says. \u201cI was married for almost 20 years, and thankfully, I wasn\u2019t putting my eggs in someone else\u2019s basket.\u201d<\/p>\n\n\n\n

Janice Co, chief strategy officer, Workplace Solutions Group at Prudential Financial, concurs. \u201cBoth working spouses should be saving as opposed to relying on one partner,\u201d says Co.<\/p>\n\n\n\n

2. Make saving a priority.<\/strong> \u201cThere is always a common theme among women and it\u2019s that we don\u2019t put ourselves first,\u201d Co says. \u201cWe save after<\/em> all our expenses and debt is taken care of. We put off saving for our \u2018future selves\u2019 because we have mortgages, credit card debt and student loan debt, or we\u2019re saving for college for our children. And we think time will be on our side to get to our longer-term needs\u2026We tend to put ourselves last<\/em>.\u201d<\/p>\n\n\n\n

I agree completely. Often, women over 50 are financial caregivers to their adult children or to their parents. But taking care of your own needs is an integral part of financial fitness.<\/p>\n\n\n\n

If you have access to a workplace retirement plan, increase your contribution rate by just one percentage point (from, say, 8% to 9%) and try to add another percentage point in successive years. A reminder from Co: \u201cIf you\u2019re 50 or over, you can contribute more\u201d to a 401(k) than if you\u2019re younger. That means you\u2019re allowed to put in an extra $6,000 in 2019, over the standard maximum of $19,000.<\/p>\n\n\n\n

\u201cIf you don\u2019t have access to a retirement plan at work, open an IRA and contribute as much as you can,\u201d says Co.<\/p>\n\n\n\n

3. Stay on the job longer, if you can.<\/strong> This is my mantra. Longer work cuts the drawdown on financial assets. It could increase the time you\u2019re covered by employer-based health insurance, reducing out-of-pocket spending on health care costs.<\/p>\n\n\n\n

Increased earning years may also let you push back beginning to claim your Social Security benefit until age 70. Doing so can bump up your benefit by 8% annually.<\/p>\n\n\n\n

Plus, additional years of work at older ages might offset earlier years of low or zero earnings (during caregiving years) for your retirement benefits computation formula.<\/p>\n\n\n\n

Continuing to work, even part-time, can also help stave off dipping into retirement accounts, allowing them to grow, and let you sock away additional retirement funds.<\/p>\n\n\n\n

4. Have regular money conversations with your spouse.<\/strong> A recent UBS poll of 3,652 high-net worth married women, widows and divorcees <\/a>found 58% defer long-term financial decisions to their spouses or ex-spouses.<\/p>\n\n\n\n

And 54% of the married women said their spouse takes the lead in handling the family\u2019s finances beyond paying bills. They didn\u2019t participate in long-term financial planning or investing decisions. One reason: Some of the women said they thought their spouse knows more about finances.<\/p>\n\n\n\n

I believe that failing to talk about your household\u2019s finances with your spouse shows a lack of trust in the foundation of your relationship. Build your investment and retirement portfolios as a team<\/em>. It keeps both of you accountable.<\/p>\n\n\n\n

5. Work with a financial adviser. <\/strong>As I wrote in my Next Avenue column, \u201cWhat Women Want in a Financial Adviser<\/a>,\u201d it\u2019s helpful to find someone you can trust to help you manage your money. \u201cWomen want someone who they can talk openly to about their lives,\u201d Maddy Dychtwald, an author and a founder of Age Wave, a think tank and consultancy, told me. She wrote an excellent women and money report with Merrill Lynch: \u201cWomen and Financial Wellness: Beyond the Bottom Line<\/a>.\u201d<\/p>\n\n\n\n

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Maddy Dychtwald<\/figcaption><\/figure>\n\n\n\n

Seek out an adviser who appreciates your financial issues, your caregiving load, your career and your money goals (which might not be the same as your spouse\u2019s). And find one who can offer a holistic approach, not just providing investment and retirement-planning advice.<\/p>\n\n\n\n

My husband and I work with the same adviser. She meets with us both separately and together and helps us stay on a solid path \u2014 solo and as a team.<\/p>\n\n\n\n

As Co says: For married couples, \u201cretirement is a joint activity so \u2018saving for retirement\u2019 should be as well.\u201d<\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

 By Kerry Hannon, <\/a><\/p>\n\n\n\n

By Kerry Hannon, <\/a>Entrepreneurship and Personal Finance Expert. Kerry is the author of the new book, Never Too Old to Get Rich: The Entrepreneur’s Guide to Starting a Business Mid-Life<\/em><\/a>. She  has covered personal finance, retirement and careers for The New York Times, Forbes, Money, U.S. News & World Report and USA Today, among other publications. She is the author of a dozen books including Money Confidence: Really Smart Financial Moves for Newly Single Women<\/em><\/a>,  Great Jobs for Everyone 50+: Finding Work That Keeps You Happy<\/em> and Healthy…and Pays the Bills<\/em><\/a>, Getting the Job You Want After 50<\/a>,Love Your Job: The New Rules for Career Happiness <\/a><\/em>and What’s Next? Finding Your Passion and Your Dream Job in Your Forties, Fifties and Beyond<\/em><\/a>. Her website is kerryhannon.com<\/a>. Follow her on Twitter @kerryhannon<\/a>.<\/p>\n\n\n\n

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