Women's Institute For A Secure Retirement

Women face unique challenges throughout their lives and they need a retirement plan that reflects that. National Retirement Planning Week is upon us and it is a week dedicated to educating Americans on retirement. At WISER, we understand the unique needs that women have when tackling this topic, and it is important that women themselves understand the issues that will have a tremendous impact their retirement planning.

Women on average earn less over their working years than men do, which means they have less to save. Women are also usually the primary caregivers, and are more likely to take time away from work or reduce work hours to care for children or other family members. Furthermore, women are more likely to work part-time which means fewer, if any, options for retirement benefits. What this means for many women is that they have less money in savings and pensions when they reach their retirement years. This reality is often made worse by the fact that once women are in retirement, many are likely to live alone due to divorce or widowhood, and they do not have the financial help a partner can provide. Women also tend to live longer, which forces them to stretch their retirement income over more years.  Even among those who take their life expectancies into account in their planning, there is insufficient understanding of the financial consequences of living to extreme old age—generally above age 85 or 90 where women outnumber men by 4 to 1.

Put all of this together and it is no surprise that women are twice as likely to end up living in poverty in old age. They can least afford to make mistakes with their money, and so they need to be making the most of what they have throughout their lifetime financial journey. When it comes to women and planning, while many manage the day-to-day budgeting and family finances, they are less likely to be involved in the bigger financial picture, such as investments and insurance. They may not understand or even know about their own or their spouse’s work retirement plans.  In order to secure a good retirement for themselves, however, women must be part of their family’s long-term financial decision-making.  When couples do plan together for retirement, they often share the same retirement plan, but the reality is that women face a very different retirement picture, and they need their own plan that is best suited for their unique situation.

Spend some time this week teaching yourself about what you will need to retire well. WISER’s website provides year-round resources on retirement planning, as does the National Retirement Planning Coalition website. To get started you can read over WISER’s newly re-released fact sheet, 10 Ways that Boomer Women (and Men) Can SAVE Themselves from Retirement Shortfalls. When it comes to retirement just remember, you can do a lot with even just some good, basic information; a little goes a long way and it is never too late to get started.

If you have not yet heard about the Consumer Financial Protection Bureau (CFPB), you could be missing out on great new resources to help you protect and grow your financial assets. Here are some important things to know about the Bureau:

Last July, the CFPB began operations to empower consumers with knowledge and keep an eye on the possible misconduct of financial institutions. An important arm of the CFPB is the Office of Financial Protection for Older Americans. This Office focuses on providing financial education to seniors. It is headed by former Minnesota Attorney General Hubert “Skip” Humphrey III, who has already demonstrated a strong commitment to helping older women as part of the Office’s mission.  The goal is to prevent elder financial abuse by bringing together federal and state agencies, law enforcement, aging networks and elders to strategize policies and disseminate information via the CFPB website, public forums, webinars and other media. The National Education and Resource Center on Women and Retirement Planning, operated by WISER and funded through the Administration on Aging, is proud to partner with the CFPB on these important issues that greatly impact older women.

The CFPB offers a variety of helpful resources.  Most recently, the Bureau launched a new portion on its website aimed at answering consumers’ most common questions. The Ask CFPB initiative answers more than 350 of the most frequently asked questions submitted to the Bureau by consumers. This is just the newest step taken by the Bureau to help consumers navigate the bumpy and often confusing road of finance.

The CFPB’s most pressing concerns are mortgages, credit cards, and student loans. The Bureau, whose jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies, was designed to consolidate the regulatory process and make it easier for the public to get information and file complaints. Since July, the Bureau has worked to create a website – www.ConsumerFinance.gov – that makes it easy for consumers to submit complaints about a wide range of financial products and services. The Bureau has launched a supervision program that oversees actions taken by financial institutions that include banks, payday lenders, mortgage companies, private student lenders, and others. The Bureau is also working to create tools to help consumers make better financial decisions (it has already developed a Student Debt Repayment Assistant).

To take advantage of the resources offered to you by the CFPB and its Office of Financial Protection for Older Americans, visit their website at ConsumerFinance.gov. To file a complaint, consumers can call (855) 411-CFPB (2372) or file online. The CFPB hopes to use data from its call centers to track the latest predatory scams against older adults and develop solutions for financial protection and scam prevention. You can also learn more about protecting yourself and your loved ones from financial scams and frauds by visiting the Financial Elder Abuse Resources on WISER’s website.

As women are becoming WISER about their retirement savings, the benefits of working longer and retiring later are growing, and more women are taking advantage of them. We live longer on average these days, and so retiring at a later age still gives most people plenty of time to enjoy many good years of R&R. More importantly, your golden years can be improved by the increase in Social Security money that you earn by putting off retirement, because the longer you put into the system, the more you will get out of it.

Both out of choice and necessity, older Americans are working. The Washington Post recently reported that “more people older than 55 are employed than ever before.” And more retirees are looking for ways to get back into the workforce. If you’re one of them, Civic Ventures, a think tank on boomers, work and social purpose, offers a program called Encore Fellowships. These fellowships are offered in seven states, carry a small stipend, and give retirees the chance to use their skills during a full-time or part-time commitment at a nonprofit, which can perhaps segway into an “encore career.” The New York Times also recently reported on a company called ReServe, which matches people 55 and older with non-profits that can really benefit from their past experience.

Entrepreneurship is also a growing trend among those looking to go back to work or transition into new kinds of work later in life. If that sounds like you, consider starting a business that can offer services to the older population. Since many people looking to start an encore career are likely to have already been through a number of challenges facing the older population they can sympathize more easily with these specific challenges, and their firsthand experience may make them supremely qualified consultants on a whole host of issues, from chronic illness coaching and moving services to memoir writing for those who wish to document their lives.

More and more companies catering to second careers are popping up to meet the increasing demand, as more retirees realize that they have plenty of working years left in them to give back and increase their retirement savings. So while retiring as soon as possible may sound appealing, working longer may literally pay off. For more information check out WISER’s Simple Guide, What Everyone Needs to Know About Money and Retirement and What Every Woman Needs To Know And Do: The New Retirement Journey.

That I Left You Broke and Penniless

Many modern day couples look quite different from past decades, highlighted by the fact that 30 percent of women are now earning more than their husbands. This step towards financial equality has not, however, changed one traditional role; men still remain largely in charge of the family’s finances. 63 percent of women still do not have any knowledge of the family’s investments or long-term financial planning, leaving all of their retirement funds in the hands of their partner. So this Valentine’s Day, give the gift that really says “I love you”: financial security.

While women are the ones who tend to pay the bills and manage the family’s day-to-day budget, they are still taking a hands-off approach with their investments, leaving that very important financial responsibility to their husbands. Many women have no idea how their retirement funds are being invested and how much money these funds are gaining or losing in any given month, or what they are entitled to if anything should happen to their spouse or their marriage. A third of women who become widowed are younger than age 60, and half of all women who will become widowed become so by age 65. For many women, the road to poverty begins after their husbands pass away. As women age, they become more vulnerable to poverty. Nearly a third of single women over age 75 are living in poverty on less than $890 a month. Many women also do not realize that a divorce does not automatically entitle them to part of their husband’s pensions. If you have taken years out of the labor force to raise children or care for family members, this could leave you in a terrible financial situation. The average woman can see her standard of living drop as much as 30 percent after a divorce.

This Valentine’s Day, give the gift of financial security by spending some quality time with your loved one going over your family finances, and vow to remain involved from this point forward. These decisions will impact both of you and so you should be equally involved in the decision-making process.

For information on how to manage your retirement, check out WISER’s What Today’s Woman Needs to Know and Do: The New Retirement Journey. For more information on how to keep your retirement secure in the face of divorce or widowhood, please visit our website and factsheets.

Are you a middle- to low- income working woman or mother? Today is a great day to find out if you are eligible for the Earned Income Tax Credit (EITC) because today is EITC Awareness Day! Being WISER with your money means knowing all the rules of the game so that you can take advantage of the tax savings opportunities available to you before you hit the finish line on April 17^th. (Remember, tax day has been pushed back from the 15^th  to the 17^th  this year because of the weekend and Emancipation Day, which is a holiday in Washington, DC.)  The Earned Income Tax Credit is one of the most beneficial tax policies for middle- to low-income families and individuals who work and meet certain requirements. To learn more about this tax credit, visit WISER’s page on  What You Need To Know About The Earned Income Tax Credit.