Why you’re not retiring anytime soon

While Americans in general are concerned about retirement, women appear to be more anxious – and with good reason. A recent report reveals that they face more financial and career obstacles then men, which can have a significantly negative impact on their retirement income.

According to the 16th Annual Transamerica Retirement Survey of American workers, fewer women than men believe that they can retire comfortably, and many women don’t think they have enough income to support them during retirement.

Below are selected excerpts from the nonprofit organization’s report:

  • 46% of women are not confident about retiring
  • 51% of women plan to continue work even after they retire
  • 64% of baby boomer women don’t have any backup plan if they are unable to work until they retire

The survey notes that there are a number of reasons why a person may have to stop working sooner than they anticipate. For example, they may lose their job and are unable to find another one. Or they may develop a health issue that renders them unable to work. Or sometimes, a family member may become ill and require around-the-clock assistance.

22% of women already have or plan to take time off to care for a family member

For example, they may need to care for a sick or special needs child, or they may need to care for a parent who needs around-the-clock care. This not only negatively affects immediate family income, but also negatively impacts the ability to save for retirement.

In a recent report by the Center for American Progress, by taking off work for just one year, an individual can lose three to four times their average annual salary amount during the course of their career lifetime! While taking time off may appear to help with childcare costs, it’s important to weigh that amount against the actual cost of leaving work (for example, the worker loses healthcare, matching retirement contributions, etc.)

28% of women work on a part-time basis

This is another situation that depresses immediate income, but it can also result in other negative financial situations. For example, part-time workers are also less likely to have health insurance. While Obamacare is income-based and does help, most people above the poverty line still pay a monthly premium that might be difficult for a part-time worker to pay every month. Especially for single women who need a family plan. And when finances are tight, saving for retirement is usually not a high priority.

When asked what they expected to be their primary source of income when they retire, most women expect to self-fund their retirement, as seen in the survey responses below:

Projected Primary Source of Income           Responses

401 K/403 B Accounts/IRAs                                    35%

Other savings and investments                                11%

Social Security                                                             29%

Working                                                                       14%

Company-funded pension plan                                5%

Inheritance                                                                   1%

Home Equity                                                                1%

Other                                                                              4%

24% of women eligible for employee-funded retirement savings don’t participate. Those who do participate only contribute 7% of their annual salary, which is not enough to make a dent in what women think they’ll need when they leave the workforce.

20% of women think they will need $1 million to retire, and 32% believe they will need $2 million or more

Granted, 62% admitted they guessed on the amount, instead of basing it on their living expenses, completing a worksheet, or talking to a financial advisor.

So that’s the dismal picture of women and retirement. However, all is not lost. TransAmerica also provides several tips to help women take control of their retirement:

  • Even if you don’t have a lot of money, realize that every bit helps. The key is to be consistent in your saving.
  • When interviewing for a job, you’ll probably consider the salary. However, you should also weigh retirement benefits.
  • If the company does offer a retirement plan, contribute enough to maximize the matching employer contributions.
  • Don’t guess about your retirement needs. There are many free, online calculators that can help you make educated projections. Once you have this knowledge in hand, you can set goals.
  • If you’re considering taking time off work, weigh the pros and cons of working part-time so you can continue to earn income to put toward your retirement.
  • Have a backup plan in the event that your financial situation changes. What would happen if you got a divorce, your spouse died, or you became ill and could no longer work? Consider such options as getting disability insurance and life insurance, downsizing your house.

Globalization has created more competition for jobs, so also make sure that you have the type of job skills that employers want.

While the future is uncertain, knowing the statistics and doing your part to plan can help you approach the retirement years with confidence.

 

 

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