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Why women are more likely to retire poor

Women face special challenges when it comes to saving for retirement. Take these steps to make sure your funds don't fall short of your goals.

By MSN Money Partner Jun 28, 2013 11:13AM

This post comes from Angela Colley at partner site Money Talks News. 

MoneyTalksNews logoWhen it comes to retirement planning, many women have a distinct disadvantage compared with men.

The U.S. Department of Labor says we're more likely to work part-time jobs that don't qualify for benefits like a 401k. Of the 62 million working women in the country, only 45% participate in a retirement plan, the department says.

We're also more likely to quit jobs to raise children or take care of a family member. We'll probably work fewer years than our male counterparts, meaning we'll likely get fewer raises and earn less. That means less money to put away for retirement.

Add to that the fact that women on average live longer than men, and you're looking at a retirement shortfall. In a recent survey, half of the women said they were worried about running out of money in their later years, says U.S. News & World Report.

Are you among them? There are steps you can take to boost your retirement funds.

1. Map out your future

Creating a visual road map for your future will make retirement planning easier. To get started, ask yourself some questions:

  • When are you going to retire? At what age do you want to stop working? If you're married, will you want to retire when your husband does? Will you need to stop work early to care for an aging parent?
  • Do you plan to take time off from work? Many women drop out of the workforce to raise children. If that's your plan, remember that you'll likely end up making less money over the course of your career as a result.
  • What do you want to do in retirement? If you plan to travel, you'll need more money than someone who intends to stay close to home.
  • How much money will you need? Online calculators can help you out. Check out these calculators from CNNMoney and AARP.

2. Assess your situation

Once you have some firm ideas about your future, see how prepared you are so far.

  • Are you saving? If you're not regularly setting aside money in a 401k or IRA, start now.
  • How much savings do you have? And how does that compare with the amount you'll need to support the retirement you want? Will your current rate of saving reach that goal? Once again, retirement calculators will help you figure this out.
  • How much debt do you have? Ideally, you'll want to be debt-free when you retire.

3. Close the gap

You have to figure out how to come up with the extra money if your current savings plan is inadequate.

  • Track your spending. Are there expenses you can cut so that you can divert those funds to your retirement accounts? Do you really need cable TV? Do you need to live in such a large house?
  • Retire the debts. Try a debt snowball if you have a lot of debt on credit cards. Can you do a balance transfer to a card with an introductory 0% interest rate? Stacy Johnson of Money Talks News has advice about whether to pay off debt or save for retirement first.

Senior woman blows out candles on birthday cake © Jaime Kowal, Photodisc, Getty Images4. Maximize Social Security

There are ways to maximize what you'll receive from Social Security. One way is to put off collecting Social Security until you're age 70, which will increase the amount of your monthly benefit. Many people opt to take Social Security early, at age 62, which reduces the monthly payment they'd otherwise receive had they waited until at least their full retirement age.

5. Participate in work-related retirement plans

If your employer offers a 401k, contribute the maximum amount possible if you can. The contribution limit for 401k’s is much higher than for an individual retirement account -- $17,500 for a 401k and an additional $5,500 if you're 50 or older versus $5,500 plus an additional $1,000 for older workers for an IRA. If you're self-employed, consider a solo 401k.

6. Factor in your spouse

For instance:

  • If your husband has a traditional pension, make sure it will continue to make payments to you if he dies before you do.
  • If your husband has a 401k or similar plan at work, the money will automatically go to you upon his death unless another beneficiary has been designated.
  • If you're not employed, make sure your spouse is contributing to an IRA on your behalf.
  • Remember that if you're divorced, you may be entitled to a percentage of what your former spouse collects from Social Security. (His payment won't be reduced as a result.)

Finally, take care of your health. Since you're expected to live longer, you'll have a longer time to pay expensive health care costs if you develop chronic conditions such as diabetes.

More on Money Talks News:

Jun 28, 2013 12:19PM
If he author is really going to support his or her first claim about women choosing part time jobs, then I have to say the operative word here is "choose." I chose a wage slave job because I had a young family to support that needed insurance and retirement.  Hang what the job was, if it had any meaning, or if I liked it.  I had no choice of happy, I had responsibility.  Now, if any person, man or woman CHOOSES a part time job for whatever reason, I do not want to hear that they are unhappy with their benefit package at the end of their career.
Jun 28, 2013 1:13PM
Women hold the cards, if they would have played it smart from the start, then they wouldn't  have to wind up broke in the end. 1. Get a good education so you don't have to depend on anyone else. 2.   Find someone that has a good education and a good job and don't wind up with a dead end loser just because he may be athletic, cute, and likes to party a lot. 
Jun 28, 2013 1:24PM
There are a dozen reasons why women end up retirning with less money coming in.   It all boils down to what you want and will give up and can give up and still maintain some sort of a lifestyle at present and future.    True women are totally not paid as much for an equal postion.  Myself included.   I am in an exective management position and earn about 25% to 40% less than a man would be.  That hurts but that is the real world.   I have combatted that with working two jobs but ofcourse with doing that don't have much free time but when I retire will get a good social security check, and can afford to put away now for my retirement years.    I did raise three children all by myself because their father just didn't work so that he didn't have any child support and yes that hurts as well.  But at this point in my life I am confident that I will be okay money wise and yes I have shopped just like all ladies but feel I do deserve to do some of that.   LADIES,  IF YOU DON'T TAKE CARE OF YOURSELF PRESENT AND FUTURE NO ONE ELSE WILL.   FIND A WAY.
Jun 28, 2013 1:52PM
I don't know where you get your information, but I've lived in Las Vegas for over 20 years and have had several female roommates.  

They were cocktail servers, banquet servers and banquet bartenders and all worked very hard over the years, earning in excess of $100 G's/year.  All of them saved over $50,000/year and invested wisely.  

Most of them rented rooms from me for approximately 5 years and when they moved out, others moved in.  I don't charge much for rent and it's been this way for a long time.

All of these women didn't get involved in the night life and that's why they were able to earn and save so much.  Several of them aren't even 40 yet, but have retired with a nice little nest egg.

If you have the will, there is always a way to retire comfortably.
Jun 28, 2013 2:56PM
I disagree with setting up your husband's pension to continue past his death. It's cheaper and better to get a term life insurance policy. I would have reduced my pension be over $500.00 a month to allow it to continue past my death for my wife. We bought a 30 year $500,000 term insurance policy when I was 55 at $800.00 a year. The men in my family don't traditionally live past 80, so we felt it was a reasonable plan.

Also, if she doesn't use it all, she can gift the reminder through a living trust to the grand kids.

Jun 28, 2013 12:25PM
In prior time many women got the short end of the stick and men reap the benefits, it's better now and in reality all either side should get is a fair deal no matter the reasons for separations. It just never seems to get done fairly. 
Jun 28, 2013 2:35PM

I read in another article that said at retirement age on average, women worked 11 less years.

That`s a lot.Of course, many took years off to raise kids.

Jun 28, 2013 3:02PM
I read something like this and cringe when I realize that even my modest efforts contributing to an IRA, 401K, and savings account (and carrying no debt)  actually put me in the upper half.
Jun 28, 2013 2:32PM
In 2010 half of employed women earned less than $669.  In 2012, 52% of retail workers, the lower end of the pay scale in the US, were women. It is unlikely, with today's economy these women are going to have much to invest for retirement.
Jun 28, 2013 1:29PM
Men I would take this advise and apply it to yourself also especially #6. Instead of husband use wife.
Jun 29, 2013 5:37AM

To whatwefightfor,

Absolutely.  Men and women in this country are definitely both screwed by the lack of decent jobs. 

Jun 28, 2013 12:00PM
DLH2448:what do you know about women?
Jun 28, 2013 3:11PM
Why will women die impoverished? Shoe collections.
Oct 26, 2013 4:41PM
Face it...the good old boys club still runs the world. If you are smarter than a man at a job they will call you a bitch and try to get rid of you. Sad fact, but who are you going to complain to - a man? Good luck with that.
Oct 26, 2013 5:40PM
Don't forget that most of the time, women make less than men do at the same job!  Woman also have to spend more money on personal items (ie. supplies for "that time of month"), and clothing, not to mention beauty items because women can't let themselves go like men do.
Oct 26, 2013 9:42PM
They fail to mention that women are STILL paid less than men in most jobs, therefore 401's are less funded.  SS is less funded.  Oh Gee!  I guess women get to be less funded before and after retirement.  I wish I was a male so I could laugh at this!  (Sorry guys, I know you don't all laugh, but guess I've run into too many that do.) 
Jun 28, 2013 4:41PM
Women don't put money in stocks or retirements but put money in safe places, not banks because governments are nosey. Im not worry about money in future.
Jun 28, 2013 12:12PM
Maybe they are broke because they are the ones RAISING a family while the men are doing NOTHING to support the kids. The men are probably gambling the money away or spending it on a 20yr old sl*t
Oct 26, 2013 6:39PM
What a **** article.  Everyone knows women marry guys that work their entire lives and accumulate wealth if they are worth anything...then they die off and the widow gets everything.  This is the reason they get married.  God forbid they would make it on their own.
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