Dorothy Haynes: Retirement Planning for Women

Sometimes as a woman gets older, she may find that her life has taken a different course than she had planned and she is unprepared for retirement. Only one-third of women think they are well prepared for retirement — and often they are not as well prepared as men.

Let’s examine some of the reasons why and look at what you can do to prepare for a safe and healthy retirement.

On Average, Women Make Less Money

Although women today make up 46.8% of the labor force, their incomes and assets often lag behind those of men. While women’s income is slowly inching upward, nationally they still make about 80 cents for every dollar a man earns. In Utah, for example, a woman who works full time makes a median income of $43,335, compared with a median income of $50,562 for a man — a difference of about $7,200 per year. Latina and black women are much further behind. According to a Census Bureau analysis by the National Partnership for Women and Families, women in Utah lose $78.6 billion per year, money they would have made had they only been male.

Though there are many factors that contribute to this pay gap, discrimination is certainly one of them, according to a number of studies including a Bloomberg analysis of 12,000 MBAs, which found that the women surveyed were making 20% less than the men they had graduated with eight years before.

Women Live Longer

Not only do women earn less, but they tend to live longer, creating a perfect storm for retirement. On average, women live five years longer than men in the United States. The average life expectancy of women is 81, while it is 76 for men. That means women need to make retirement funds and assets stretch longer and should begin investing earlier.

Women are More Likely to Be Caregivers

More women than men drop out of the workforce at least for awhile to take care of children, invalid spouses, or elderly parents. They are not earning during that time period or contributing to Social Security. So when retirement rolls around, if they find themselves single, widowed, or divorced, their financial situations in retirement may be much worse than that of most men. They may have little savings, and they may not have health insurance.

A study at the Center for Talent Innovation found that when women stay out of the workforce three years or longer, they may reduce their earning power by 46% on average.

Retirement Planning Tips for Women

With the combination of reduced earning power when women become caregivers, living longer than men, and the long-standing pay gap, women need to do more to prepare for retirement than men. That said, here are 10 retirement planning tips for women.

Take control of your budget.

To have enough money now and in the future, you need to know where it’s going. Know your expenses and income, and then you can make a plan. You may decide to cut some expenses or change your lifestyle in order to reach retirement goals.

If there’s still time, consider your life choices.

Women may face pay discrimination even in high-paying fields, but many women also tend to choose fields that do not pay well. If you are still young and choosing a career, consider the long-term prospects of the field you are considering entering. Also, if you quit work or go part-time in order to take care of children or aging parents, remember you can’t always count on having a husband to help support you in retirement. Divorce and death can completely upset the best-laid plans.

Ask for what you’re worth.

Studies show that many women ask for lesser salaries and raises than men do. One study by Hired, a recruitment website, found that nationally, women ask for $14,000 per year less on average than men do for marketing, sales, and technology jobs. In Los Angeles, they ask for $10,000 less. So ask for what you are worth. Don’t be shy. Nobody is going to look out for you but you.

Play tough in divorce negotiations.

Women may expect to have a husband to help with expenses in their retirement years when they make decisions to drop out of the workforce to care for children or others, but today, about twice as many women are divorced than 20 years ago. Sometimes when women divorce, they may agree to terms just to get it over with, or they may hesitate to ask for what they really need. But you must take what rightfully belongs to you and be justly compensated for your contribution to the marriage. When you are discussing spousal maintenance and property division with your attorney, don’t forget to discuss your husband’s retirement assets, such as pension and retirement plans.

Be smart about Social Security.

If are widowed, you will only receive one Social Security payment based on your work history or that of your deceased partner’s. You can get the higher of the two. Acquaint yourself with the details of Social Security before applying.

Save wisely in retirement accounts.

If your employer will match what you put into a retirement account up to a certain cap, take advantage of that and put in at least what your employer will match. If you’re over 50, you are allowed to make additional retirement contributions, and you should.

Prioritize your retirement savings.

It’s easy to put everyone else ahead of you. But don’t steal from the money you should be saving for retirement to put your kids through college or fix up the house. A recent survey by Country Insurance & Financial Services showed that while 49% of mothers chose college over retirement as a priority, only 39% of fathers did. Put your retirement savings first.

Be the primary beneficiary on your husband’s retirement accounts.

Check today to be sure you are the primary beneficiary on your husband’s retirement accounts, rather than some other family member or an ex-wife. This is extremely important because beneficiaries on retirement accounts take precedence over those named in a will.

Look out for yourself.

We mentioned this already, but it bears repeating. Be in charge of your own retirement. Don’t put your future into the hands of anyone else, including your partner or children.

Discuss your financial options with an advisor or attorney.

These are just a few of the things you can do to prepare for retirement, but perhaps you have a lot of medical or credit card debt to wade through before you can even think of retiring. Bankruptcy may be able to help. Most, if not all, of your retirement plans would be protected while filing for bankruptcy, in addition to your home, car, and more.

Free Initial Consultation with a Utah Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.