Unique Challenges For Women Mulling Retirement

OCEAN CITY — Despite their growing economic might, women still have a more difficult road to a secure retirement than men, notes Debra Greenberg, director of IRA product management at Bank of America Merrill Lynch. 
Greenberg points out that women still make 80 cents for every dollar earned by men and are much more likely to interrupt their careers to care for a child or a parent, which can result in a reduction in both wages and Social Security benefits lost.

They also face even more retirement hurdles. Divorce, for example, tends to have a bigger financial impact on women than on men. A study titled “Losers and Winners: The Financial Consequences of Separation and Divorce for Men,” by researchers from Columbia University and Indiana University, showed that in the wake of a divorce, women’s households experienced an income drop of 26%, compared with 15% for men.

The good news is that, armed with an understanding of both your retirement needs and present opportunities to invest and save, there are a number of steps you can take to overcome these retirement challenges. You can begin by thinking about what your two to three decades in retirement will look like — and what you want them to look like. Then, work with your Financial Advisor to translate that picture into a realistic saving and investing approach, suggests Andrea Nierenberg, an executive coach and consultant.

Saving is an important first step in planning your retirement, but it’s just as important to see to it that your wealth is growing. The good news for women is that, in this regard, they may just have an edge over their male peers. According to a University of California study called “Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment,” women’s portfolios on average outperform men’s because men tend to trade stocks more frequently, generating fees, and to hold more volatile portfolios. On the other hand, because women tend to be more risk-averse, they sometimes sacrifice growth opportunities for safety.

Life happens. Monitoring your progress and making adjustments on a regular basis can be crucial when preparing for the unexpected. “Life events such as divorce, the death of a spouse or a change in employment often require financial action,” Greenberg says. Newly divorced women who are still single, for example, often don’t realize they may be able to claim Social Security benefits based on their former spouse’s earnings. “Even if a woman remarries and is then divorced or widowed, she can claim benefits based on a first husband, if his benefit is higher than her own or that of her most recent spouse,” Greenberg notes. “But the marriage has to have lasted at least 10 years.” Regular conversations with your Financial Advisor can help you monitor your progress and make any adjustments based on life events — anticipated or not.

Ultimately, it’s the basics — saving more, investing wisely, looking at the big picture and understanding your options — that will help ensure that your savings last. Yet those basics are easily lost in the shuffle of everyday life. “Often people put retirement planning off, whether it’s because they think someone else will take care of them, they’re busy, or they find it overwhelming,” says Nierenberg, who urges women to take an active role in financial planning. “We all want security, safety and balance—and it’s up to us to provide those for ourselves.”

(The writer is a senior financial advisor and can be reached at 410-213-8520.)