Women, especially single women, have good reasons to worry about their retirement planning.
I've been helping three single friends -- one widow and two divorcees -- figure out where they are going to get the money to retire. Although all of them currently have jobs, none of them has a big retirement nest egg, and a couple of them don't expect to qualify for much Social Security because they didn't work for several years while their children were young.
They aren't alone. Three studies of the state of women's retirement planning for the Insured Retirement Institute, a trade association for the retirement income industry, conclude that 51 percent of baby boomer women aren't very confident that they have enough money to retire and be comfortable. Another 19 percent have no confidence or are unsure that a comfortable retirement is likely for them.
The report is prefaced by some key data that have a strongly negative impact on women's financial situations:
- While women's salaries have increased 91 percent from 1970 to 2010, women on average still earn only 82 cents for every $1 earned by men, according to the Bureau of Labor Statistics.
- Women live longer than men. According to Social Security, women turning 65 this year on average live to be 86, while 65-year-old men are likely to live to 84, on average.
Some 56 percent of boomer women are expecting an old-fashioned defined benefit pension, according to the study, but if my three friends' circumstances are any indication, these pensions aren't necessarily large. My widowed friend gets $225 a month from the insurance company where she was a secretary for a few years, and one of my divorced friends is expecting $625 a month from a publishing company where she was in charge of circulation and delivery. Something is better than nothing, but it is not enough for these women to live on.
5 things to consider
If you are in a similar situation as my friends, here are some things to think about:
Understand Social Security. Divorced spouses who were married at least 10 years can collect on their former spouse's record. Widowed spouses are eligible for survivors benefits. Don't just go to the Social Security office and take what the person at the counter offers. Social Security doesn't discuss potential Social Security claiming strategies, and you may inadvertently shortchange yourself. Instead, find one of the increasingly available financial advisers who can expertly navigate Social Security's rules.
Don't overlook a pension or 401(k) from a former employer. Don't just assume you don't qualify; check by calling the personnel office. Be persistent until you get a reliable answer. If your former employer is no longer in business, check out this list of unclaimed pensions on the website of the Pension Benefit Guarantee Corp., the government agency that guarantees private pensions. There are thousands of names on the list. You may be pleasantly surprised.
Explore your housing options. If you own a home, it may help you finance your retirement via a sale or a reverse mortgage. Again, these transactions are complicated. Get help from someone who isn't hoping for a commission.
Take advantage of any veterans benefits. If you or your spouse was a veteran, you may qualify for assistance with long-term care through a program known as Aid and Attendance. You can go directly to the Department of Veterans Affairs, but you may be better off getting help from one of these organizations: Veterans of Foreign Wars, American Legion, Military Order of the Purple Heart, Vietnam Veterans of America, Disabled American Veterans, AMVETS and Paralyzed Veterans of America. All of them will help with the paperwork, and you don't need to be a member.
Think creatively about a second career. About 23 percent of entrepreneurs who formed new companies in 2012 were 55 or older, according to research by the Ewing Marion Kauffman Foundation. Think big if you want to, but a business such as selling used golf balls online may be all you want or need.
Before you retire, also consider the cost of living.