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Why women need to plan for their retirement

For many women, a happy retirement consists of three key elements: time, freedom, and peace of mind.

Time—for a good book, uninterrupted by a deadline or must-do project.

Freedom—to take a present-laden trip to see the kids, help out at the community bazaar, or make a spur-of-the-moment decision to extend that ski weekend another two days.

Peace of mind—to snuggle on the couch until midnight on a week night watching a favorite movie, not worrying about this bill or that one, or the need to obey the call of an alarm clock at the crack of dawn.

Heaven? No. Just retirement. And while the above may not approach your personal nirvana, you get the idea.

With improved life expectancy, the need to fund more years post retirement, and the recent sluggish economy, many women over 55 are facing up to the prospect of working longer. According to a global comparison in 2010, women in the United States outlive men by five years—80 for women and 75 for men—according to a Reuters report. Those are just the life expectancies at birth. By retirement, the gap widens even further.

Unfortunately, women usually have less saved for retirement. Let’s look at an example, and then at what steps you can take to help get on the right road for a long and financially secure retirement.

For love or money

Joanie and Jake learned a valuable lesson recently. It seems that when Jake works, it is always for love AND for money. No questions asked. But when Joanie works—because she has alternated between keeping the home and earning a paycheck—it is for love OR for money. The lesson: If they hadn’t done some focused retirement planning together, Joanie risked being short-changed big time financially in her senior years. The story is fairly typical.

After she married, Joanie worked until the children came, then spent a decade as an at-home mom, followed by nine years in banking before a mega merger left her free, so to speak, to pursue other goals.

Today, they’re empty nesters. While Jake works as a self-employed consultant from his office at the house, Joanie divides her time between part-time tax preparation and maintaining a beautiful organic garden. It’s a great life.

Here’s the problem. When looking at their retirement plans, they discovered that since Joanie’s years in the workforce were limited, her total retirement benefits will total less than $300 a month. Jake’s—the payoff for three decades plus of uninterrupted workforce participation—will be more than 10 times that. The situation isn’t all that uncommon. Unfortunately, this leaves many women unprepared for the future, financially.

As husband and wife, Jake and Joanie learned there was a lot they could do. For starters, they began talking about money. They mapped out a retirement strategy that covered the whole range of “what if” scenarios: if he should die first, if she should die first, if they should divorce (yes, it needs to be addressed), if one became incapacitated, and so on.

You will in all likelihood need more retirement income than you thought. How do you make sure you don’t have a wake-up call like Joanie? Wherever you are in the retirement planning timeline, the key is to act now.

One scenario
Let’s assume that you will need $40,000 a year in today’s dollars at retirement. Let’s further assume that you will live six years longer than a man who is the same age as you. That means you will need nearly an additional $240,000 in retirement income! Some may come from Social Security; some may come from a pension at work. But you may need to make up a shortfall yourself—or run the risk of spending your retirement years struggling financially.

It doesn’t matter whether you are married or single; in your 20s or so close to retirement you can taste it. If you are not already actively and aggressively involved in making sure you will be financially secure, it’s time to take the plunge.

Unfortunately, many women are not doing anything about their situation. According to The 2009 Retirement Confidence Survey conducted by Employee Benefit Research Institute, workers who say they are very confident about having enough money for a comfortable retirement this year hit the lowest level in 2009 (13 percent) since the Retirement Confidence Survey started asking the question in 1993.

What to do right now:

Plan for a long life. If possible, make maximum contributions to qualified plans through work. Sacrifice in other areas if necessary.

Dare to dream. By making little sacrifices today, you can help lock in the retirement lifestyle and security you want tomorrow, helping to assure that your retirement years are in fact your golden years—safe, secure, free of financial worry.

Contact Social Security. Make sure your earnings records are right and find out how big your benefits checks will be at retirement. The toll free number is (800) 772-1213. Or you can reach them online at: Do the same with your pension administrator at work, as well as with all administrators from previous positions.

Make maximum contributions. Take every advantage of your employer-sponsored 401(k) and other qualified plans and IRAs, as well as saving after-tax dollars in annuities and other financial vehicles.

Work closely with your spouse. Remember, odds are that you will outlive him; make sure your financial arrangements reflect that.

Your future is in your hands. Take charge of your retirement planning today.

A local New York Life agent would be happy to talk about your retirement income needs. To find one near you, simply click on the ‘Talk to Us’ button and we’ll begin the process.