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Women + Retirement: Taking Control of Your Financial Future

| May 05, 2016
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In his 2015 Scientific American article, Why Women Live Longer Than Men, the director of the Institute for Ageing and Health at Newcastle University in England, Thomas Kirkwood, writes:

Women + Retirement: Taking Control Of Your Financial Future“If there are any men left who still believe that women are the weaker sex, it is long past time for them to think again. With respect to that most essential proof of robustness — the power to stay alive — women are tougher than men from birth through to extreme old age.”

The average man may run a 100-meter race faster than the average woman and lift heavier weights. But nowadays women outlive men by about five to six years. By age 85, there are roughly six women to every four men. At age 100, the ratio is more than two to one. And by age 122 — the current world record for human longevity — the score stands at one-nil, in favor of women.

If you are a woman planning ahead for your retirement, consider these questions:

    •    Where will your retirement income come from?

    •    When should you begin taking Social Security?

    •    What will your retirement cash needs be?

Now, let’s unpack this topic one piece at a time, with the goal of giving more women a little peace of mind.

1. Identify your sources of retirement income.

Here are the facts: These may come from a variety of sources, including guaranteed pensions, retirement plans [401(k)s, IRAs, 403(b)s, annuities] — and Social Security, which often represents the lion’s share of retirement income for women.


Here’s the reality: Women in the 21st century have made progress in the area of earning power; however, they still have a ways to go before reducing the existing retirement income gap with men. The reality is that over a lifetime, women spend approximately 27 years in the workforce versus men, who spend almost 40 years. And because women often leave the labor force to have children and care for family members, in retirement they receive about half the pension benefits that retired men receive. This also means women receive less in Social Security benefits.

2. Understand your options when it comes to your Social Security benefits.

Here are the facts: Considering that a large percentage of women rely on Social Security as a main source of retirement income, making an informed decision about when to claim Social Security benefits must be carefully considered since it will greatly impact their retirement income for the rest of their lives. Whether you are single, married, divorced, or widowed, you must develop an income strategy. Please note that your decision on how you take Social Security is very individual, and you should consult your financial adviser or the Social Security Administration.


Here’s the reality: To determine when you should begin taking Social Security, consider when you are eligible to receive Social Security benefits.

  • If you have 40 quarters of wages that were subject to Social Security payroll taxes, you are eligible to receive Social Security benefits.
  • Your benefits are calculated based on the average of your 35 highest years of earnings. So, if you work fewer than 35 years, your income for the missing years is counted as 0, which can bring your average down significantly.
  • You do not need to reach full retirement age (FRA) to begin receiving your benefits. However, claiming your benefit when you turn 62 can be a costly — and permanent — decision.
  • You may begin taking reduced Social Security benefits when you reach age 62 rather than waiting until FRA.
  • Another option you have is to postpone taking your Social Security benefit until age 70, which increases your benefit by approximately 32 percent, depending on your FRA. There is no advantage to wait beyond age 70. Some women may not have an option, and life circumstances may force them to take their Social Security benefits as early as age 62.

And remember: Depending on the year you were born, your benefits will vary.

  • If you were born between 1943-1954 (ages 61-72) and you take your benefit at age 62, you will receive 75 percent of your benefit. If you wait to full FRA, you receive 100 percent of your benefit. If you wait until age 70, your benefits will increase another 32 percent.
  • If you were born in 1960 or after (ages 55 or younger), two months are added to the FRA each year. If you take your benefit at age 62, you will receive 70 percent of your benefit. If you take it at FRA (age 67), you will receive 100 percent of your benefit. If you wait until age 70, your benefit will increase by 24 percent.

3. Assess your ideal lifestyle, and create a realistic budget for the amount of cash you’ll need.

Here are the facts: When you ask yourself how much monthly or annual income you will need in retirement, consider the studies that suggest you will need 70-100 percent of your pre-retirement income. And it’s important to consider the lifestyle you hope to have, which most likely will be the one you have become accustomed to during your working years. Therefore, creating and managing a budget today is good way to get a handle on your current expenses and make adjustment to your retirement budget. This, of course, will depend on your expected income resources such as pensions, retirement plans [IRA, 401(k)s, 403(b)s, annuities], and any additional personal savings. I encourage you to use these numbers to create a clear road map so you can attain a desirable retirement income.

Here’s the reality: According to the Social Security Administration, in 2013, the average annual Social Security income received by women 65 years and older was $12,857, compared to $16,590 for men. For unmarried women of this same age group, 49 percent receiving Social Security benefits relied on Social Security for 90 percent or more of their income. Women over the last decades have made strides and are successfully closing the gender gap in some areas of their lives — but most still are less prepared than men in retirement.

The Bottom Line:

As a woman, your life in retirement will be shaped by many factors, each unique to your situation. That’s a given. But if you take control of your finances today, and plan wisely for the future, there’s no reason you won’t be able to enjoy your retirement years.


If you are unsure or confused about what steps to take or how to create a financial plan that’s right for you, it’s always a good idea to consider seeking professional assistance.

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