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 Women who aren't mothers need to have the talk, too. That's because
women face a much tougher retirement outlook than men, and the
reasons are clear.
"Women have lower lifetime income based on less time in the
workforce," says David Littell, who directs a program focused on
retirement income at the American College in Bryn Mawr,
Pennsylvania. "As a result, they have less in savings, lower Social
Security benefits - and they live longer than men. Those things
don't go well together."
Many women still earn lower wages than men: On average, women made
about 81 percent of the median earnings of men in 2012, according to
the U.S. Bureau of Labor Statistics.
They're also more likely than men to work part-time, often because
of caregiving responsibilities for aging parents or children. That
cuts into earnings, but it also means they are less likely to have
access to workplace retirement plans.
The 2014 Transamerica Retirement Survey found that 66 percent of
women have access to a workplace retirement plan, compared with 71
percent of men. Women who do have access to a plan participate at
nearly the same rates as men, but their contribution levels are
lower - 7 percent of salary, compared with 10 percent for men.
TAKING CONTROL
Experts point to several valuable steps that women - moms or not -
can take to boost their retirement security, including:
- Maximize Social Security. The most important step women can take
to improve their retirement prospects is to get the most out of
Social Security. For most, that will mean waiting to claim benefits
until full retirement age (currently 66) or longer. Each year of
delayed filing (up to age 70) translates to roughly 8 percent
additional annual income.
"If you can wait, that gives you more secure income for life that
you don't have to worry about outliving, and it's adjusted annually
for inflation," says Joan Entmacher, vice president for family
economic security at the National Women's Law Center, a non-profit
advocacy organization. Entmacher also notes that Social Security
often is worth more to women at advanced ages, when other resources
have been exhausted.
She advises women to "get out of the mentality of thinking about the
total amount you'll get in your life, since you can't be sure how
long you'll live." It's also critical, she notes, for couples to
plan Social Security benefits together. The higher-earning spouse -
typically the man - should delay benefits as long as possible, which
will result in a much higher survivor benefit for spouses down the
road.
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- Get an early start. Starting early on retirement saving is
critical, because even small amounts saved now benefit from
compounding over time. Research by Vanguard has shown that an
investor who starts at age 25 with a moderate investment allocation
and contributes 6 percent of salary will finish with 34 percent more
in her account than the same investor who starts at 35 - and 64
percent more than an investor who starts at 45.
"Since many women face interruptions in work sometime during their
career, starting to save on your first job can be incredibly
meaningful," notes Littell.
- Make a plan. When you don't have a written retirement plan,
it's difficult to make adjustments along the way. If possible, make
a plan with the help of a financial adviser, says Littell. "This is
the best way to keep track of where you are, and to be able to
adjust when conditions change."
An adviser can be especially helpful sorting out family financial
pressures that can affect retirement, he adds. Merrill Lynch
research shows that 60 percent of Americans over age age 50 are
providing financial support to family members, and 5.8 million
children live in grandparents' homes. "Helping with family needs is
important, but if you don't have a plan, you don't really know how
much you can afford to help," says Littell.
"I don't have data to prove this, but women are very focused on
family relationships, so they're more at risk of hurting their own
retirement security by giving away more than they should."
For more from Mark Miller, see http://link.reuters.com/qyk97s
(The opinions expressed here are those of the author, a columnist
for Reuters.)
(Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance.
Editing by Douglas Royalty)
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