By Anna M. Rappaport, FSA, MAAA
As more boomers move into their 60s, America is becoming more aware that how and when we think about retirement is important to us personally and as a country. Some of us have jobs with very good retirement benefits and can choose to retire and do as we please starting in our early or mid 60s. Others are not so fortunate, and it is up to us as individuals to build our economic resources.
Decisions we make throughout our lives will influence how well prepared we are for retirement, and often we may not realize that an action we take can have long-term, unexpected consequences. For example, the type of job we take may well drive our career, and different types of employment have different benefit levels. Changing jobs may have a big unrecognized impact on future security. Personal choices like getting married, living together and not getting married, and getting divorced can also affect our bottom line later on. Seven Life Defining Decisions, a joint project of the Women’s Institute for a Secure Retirement (WISER) and the Actuarial Foundation, focuses on helping women understand how decisions made throughout life will influence retirement security. It is written for the individual and has tips for women at all ages, including those just starting their careers and those at or beyond retirement age.
For women who are nearing retirement age, two publications of significant interest are Women at Risk and Taking the Mystery Out of Retirement Planning. The Actuarial Foundation was a partner and contributor to both of these projects. The Women at Risk project, organized by the Task Force on Issues of Women as They Age of the Chicago Bar Association and the Women’s Bar of Illinois, includes nine issue papers on topics of interest. Taking the Mystery Out of Retirement Planning is a project of the U.S. Department of Labor, and it includes online support materials.
Retirement planning is a particularly important issue for women. Retirement risks impact men and women in different ways, primarily because, on average, women live longer, earn less, and spend fewer years in the workforce than men do. At age 65, life expectancy is 17 years for men and 20 years for women. Differences in earnings and work history lead to lower pension benefits. Women are also more likely to be alone in old age, since they typically live longer and often marry older husbands. By age 85, 86 percent of women are alone, compared with 45 percent of men. Many women will spend 15 or more years as widows.
When people are on their own to build retirement security, the longer they live, the more likely the funds they saved will be used up. This happens to many women, who may not have adequate resources if their spouse dies first. About four in ten older women living alone have virtually no income beyond Social Security.
I hope these comments will encourage those who have not started planning — or who are not doing enough — to do more to plan for their futures. For more information, visit the Actuarial Foundation website, my website, and the WISER website.
Anna Rappaport is a nationally and internationally recognized actuary and expert on the impact of change on retirement systems and workforce issues and a frequent speaker and author. She is passionate about creating a better future for older Americans by improving the retirement system in America, and she is particularly concerned about the many women who do not fare well at older ages.
That would be very helpful. Planning for retirement for women is indeed different and in my opinion would need more careful considerations. With women’s longer life expectancy and shorter working years as compared to men, women retireree would more likely fall on poverty line.
It may sound corny, but attitudes like those can really be life changing. I believe that we all should give inspiration to elders – and even to ourselves – to adopt such routines. Retiring is another of many transition stages in life, and it can be psychologically demanding. An assisted living home is a way to give elders support through activities, health care and a professional support staff. While researching for assisted living facilities in the Lehigh Valley of Pennsylvania for my parents, I stumbled upon a very professional company, DevonHouse Assisted Living. Their website http://www.devonhouseassistedliving.com is filled with useful information on this topic.
This type of dialogue is so significant because, working on the National Elder Economic Security Initiative™ Program, we deal with the widespread trends in older women’s economic well-being. As illustrated by our fact sheet: Single Women’s Retirement Income Falls Short of the Elder Economic Security Standard™ Index, The average annual Social Security income for all women provides a single elder homeowner without a mortgage less than 70% of the income required to achieve economic security in retirement. Statistics like this one and the ones mentioned above, there is an evident need for better tailored financial literacy and planning programs, better and more useful income supports to help seniors make ends meet, and a more accurate benchmark, like the Index, of what it takes for older women to meet their needs during retirement.
For more resources and information please visit the National Elder Economic Security Initiative™ Program Blog or the Wider Opportunities for Women website.