The Challenges Women Face Planning for Retirement - A Special Report

When it comes to planning and financing their retirement, women are more financially vulnerable and face greater challenges then men.

Typically, the causes of this phenomenon are lower earnings over a career lifetime, employment patterns, caregiving responsibilities and marital status. Illustrating this point is the fact that the U.S. has the highest poverty rate of older women of all post-industrial nations (Facts on the Status of Working Women, 2004).

Many women work in lower-paying female dominated positions (Your Future Paycheck, 2002). Lower paying positions translate to less retirement income. To increase their retirement nest egg, women should resist complacency and test for higher paying positions, apply for internal promotions and/or move laterally to departments that may offer more room for growth. Going back to school may also help women get to the next level.

Women are usually the family caregivers for both children and dependent parents. Because of this, they frequently move in and out of the workforce, reducing the amount of service credit used in formulating their retirement benefit. In 2000, women had on average 32-year careers compared to 44 years for men. This discrepancy may be equalized by buying back any eligible service credits or transferring service credit from other systems when possible. By postponing retirement, women can also close the gap as married women tend to retire at the same time as their husbands, but are on average three years younger and have fewer service years. Therefore, joint retirement may not be the best idea.

Women live approximately three years longer than men and are more likely to survive their spouse. The average age of widowhood is 55. Since income usually drops significantly after the death of a spouse, widowed women should consider long-term care insurance, which provides additional physical and financial assistance. Women must assume that they will need more in retirement simply because of higher health care costs, outliving their spouses, and longer life spans. Therefore, they should consider their earning potential and working longer to establish more service years. Beyond that, the best protection for women, as for all Members, is learning about and planning for retirement.

The first step in effective planning is to attend a LACERS Planning for Retirement seminar. At these seminars, women will learn about options that may increase their retirement benefits, such as buying back service credit after maternity leaves or other leaves of absence or reciprocity agreements if they have worked for other governmental entities throughout their careers. Our Lunchtime Lecture Series addresses subjects that can assist women in retirement planning such as financial planning, divorce, part-time employee retirement benefits and survivor benefits. If you are a woman, knowing where you stand and where you want or need to go will enable you to plan effectively.