Why Women Need to Save More for Retirement

Women remain at a higher risk in retirement than men according to research recently published by the National Institute on Retirement Security (NIRS).

Women, according to the report, Shattering the Retirement Glass Ceiling: Women Need a Three-Legged Stool, need to accumulate more retirement assets than men because they on average live longer. However, acquiring enough assets is more difficult for women because they still have lower wages and less access to retirement plans during their working years as compared to men.

Lower Wages Continue to Haunt Women

Retirement is made secure with a combination of a traditional pension, supplemental 401(k) type individual savings and Social Security. Because of her longer life expectancy a woman with a salary of $50,000 must save $1,000 per year more than her male counterpart to achieve equitable retirement income. That might be hard to do given that full-time female workers made just 76.2 percent of their male counterparts' wages according to figures from 2007, the last year available.

To be fair, both men and women need to save more for retirement, said Financial Planning Association (FPA) board member, Karin Maloney Stifler, of True Wealth Advisors, LLC. Men and women also need to take more responsibility. "Women and men can both choose to make long-term financial security a higher priority," she said.

Women Less Prepared for Retirement

But women are worse off. "Unfortunately, it is a reality that women are less prepared for retirement," warned Senior Vice President Stacy Schaus of PIMCO and Defined Contribution Practice. "We also know elderly women are also far more likely than men to fall below the poverty line."

Deena Katz, an associate professor at Texas Tech University, agrees with the study's results that women are worse off and need to save more. "The demands on a woman's resources post retirement are far more dramatic than a man's," she said. For example, women are the primary caregiver for parents. The average age of widowhood is 56, and over 60 percent of marriages end in divorce.

Women Likely to be Alone Through Much of Later Life

Women need to plan for the probability that they will be alone during their lifetime especially during the last years of life, Maloney Stifler said.

"While is less able to prepare financially for retirement, her need for the resources at retirement are generally more," Katz said. "I'd say forget the three-legged stool and plan on a big sturdy four-legged chair that includes an expectation of needing double the personal savings."

Plan for “Me First”

Women need to take a "me-first" approach when it comes to planning for retirement. "Like pulling down the oxygen mask in a bumpy plane ride and then helping others, women would be well served to look after themselves when it comes to saving for retirement," said Bonnie Hughes, of The Enrichment Group.

Maloney Stifler added that "Many women put their own well being, financial and otherwise, on the back burner while tending to other's needs first….Women need to know that it is not selfish to make self-care a priority. If you do not care for yourself, you have less to give to others. Self care includes investing in skills and careers to remain employable, to save for retirement long-term before paying for the children's "wants" to maintain good health and to boost financial literacy so they can make wise decisions about the money they do have. Being financially secure is part choice and part luck (good or not so good), but it is undoubtedly one of the best gifts we can give to ourselves and to the people we care about most.”

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This article was produced by the Financial Planning Association, the membership organization for the financial planning community, and was edited by Robert S. Jackson, PhD. and Patrick Murfin of Oaktree Capital Corporation.