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.

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.

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.

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.

Remember, everyone’s financial situation fluctuates. Some years you will have more disposable income than others. Adjusting your spending to match your current financial situation is important. How you lived last year may be beyond your means this year. Don’t live your life in your financial past, live appropriately for your financial present and prepare for your financial future. There is nothing embarrassing about a little belt tightening now, especially when it will provide you with a more comfortable future, one without debt and with a safe and secure retirement.

The first thing to understand is that a spending plan is not a form of punishment; all it means is that you are setting some financial goals for yourself. Those goals might be to simply cover your basic expenses, to put more money in your retirement fund, pay down your credit card or student loan debt, save more money for your kid’s college fund or save up for a fabulous summer vacation. Whatever your financial situation is, it is always good to know where your money is going and to set some goals for where you want it to go based on your current situation.

The first thing you should do is come up with a realistic financial goal, or maybe a couple of realistic goals.

Don’t try to achieve the impossible because if you can’t reach your goals it will deter you from setting goals in the future.

Once you have your goals, write them down. You will be more likely to accomplish them if you have a hard copy. Be creative! Incorporate them into a short story, or write them with lipstick on the mirror. A simple list taped to the fridge will work too.

Next, build a quick and easy budget. List your sources of income and all your expenses. Don’t leave out the little ones. Like the morning coffee or the $3 ATM fees. Try to jot down everything. You can look at your last few months’ bank statements to get a feel for your income and outgoing expenses and to identify expenses that you may be able to cut back on.

Don’t forget that little things add up. There are lots of little expenses that you may pay for with cash, so it is a good idea to keep a money journal for a few weeks, see what small cash items you purchase repeatedly, such as food and beverage items. If you need to reduce your expenses, this is a good place to start.

After figuring out your incoming and outgoing monies, you will know about how much disposable income you have to work with every month.  If you’re in the negative and don’t have any disposable income, then your realistic goals should be to cover all your necessary expenses and try to cut out anything unnecessary so that you can start saving some money. Don’t panic or feel distraught Remember, just because this may be your financial situation this year, doesn’t make it so next year, especially if you follow your spending plan.

What should your financial goals be?

When figuring out your financial goals, it is important to priorize.

First, you need to make sure that your basics are covered: food, shelter, warmth, light, health care and transportation. If those are covered you can plan ahead. If not, focus on those for now.

After your basics are covered, start looking forward.

Start your rainy day fund. A good goal is to have at least $1,000 saved for emergencies.

Next you can tackle your smaller, high interest and/or non-tax deductible debt, such as credit card debt and car loans.

When your smaller debt is paid off, add to your rainy day fund and start planning for retirement. The rule of thumb is to have at least 3-6 months worth of expenses saved up in your rainy day fund and at least 10% of your income going in to your retirement fund. If this is amount sounds impossible to achieve, just remember you can start small—every little bit counts!

If your company offers a matching 401(k) option, take it! It’s a great way to save and accumulate some free cash for retirement. Also, open an IRA or Roth IRA and put as much money in every month as you can. Don’t forget that delayed gratification will be your best friend in retirement.

When you have your retirement plan up and running then you can start paying off more of your bigger, low interest, and/or tax-deductible debt, like home mortgages and student loans.

Now, don’t forget to throw in an occasional activity, such as a movie, a manicure or a delicious dinner at a nice restaurant. These are great ways to reward yourself for reaching a financial goal. (Just don’t overdo it or you might end up back where you started!)

If you have all of the above checked off, congratulations! Now you can focus on building your wealth and giving back.

And Check out WISER’s Checklist for the Decades to see what financial goals you should focus on at the different stages of your life.

Don’t forget, with every year comes new excitement and new challenges. Periodically reassess your financial situation and adjust your expenses accordingly. Your future self will thank you. Happy 2012!

Sometimes the stress of caregiving can worsen the health of the caregiver. A study published last year by MetLife Mature Market Institute in collaboration with the National Alliance for Caregiving and the University of Pittsburgh Institute on Aging found that if you are a caregiver, it will likely affect both your health and your employer’s healthcare costs. Employees caring for older relatives are more likely to report health problems such as depression and hypertension. The healthcare costs for these employees are eight percent higher than for non-caregivers. Younger caregivers (18-39) generate even higher health care costs for employers- about 11 percent more than other employees.

The study recommends improvements in access to flexible work schedules, paid time off and telecommuting as ways to reduce the health problems that caregivers experience and also to show support for caregiving in the workplace. The full study can be found here.

Just last month, the Family Caregiver Alliance launched their Caregiver College Video Series for 2011. This great resource offers an introduction and seven concise chapters that help the family caregiver with their daily caregiving efforts. Contents include transferring, nutrition, personal care challenges, behavior issues and the all important caregiver self-care.

Visit WISER’s Caregiving webpage and read through our Financial Steps for Caregivers guide for more caregiving resources.

To compare Medicare’s Advantage and Part D plans to your current coverage, you can access information on Medicare’s Plan Finder. You can use this plan finder to compare prices and coverage of different Advantage and Part D plans in your area.

Things to look out for

When comparing plans, pay attention to the lowest total out-of-pocket costs for medications.

Check to see if your plan is increasing its co-payments.

Watch out for drug tiers which increase the price of a drug depending on which tier it falls under and may have changed since your last enrollment. Make sure that your drugs have not been moved to a more expensive tier since your last enrollment.

Be aware of your pharmacy-prescription combination. Some pharmacies charge less for preferred brand-name drugs than for non-preferred generics and some plans will charge a lot if you use nonpreferred pharmacies.

Resources

MedicareInteractive.org has a thorough explanatory video that covers everything from basic information about Medicare to specific changes that will take effect in 2012.

The National Council on Aging offers a number of resources to help you find the specific plan that fits your needs, including their MyMedicareMatters website.

You can find lots of helpful information on Medicare’s own website or by calling Medicare at 1-800-MEDICARE (1-800-633-4227). Reading over their Medicare 2012 Handbook should answer many questions that you may have.

Now that you understand the need for long-term care and the costs associated with long-term care insurance, here are some helpful tips to keep in mind when selecting a long-term care insurance provider. Long-term care insurance can be one of the most complex types of insurance you may ever purchase, so make sure you keep these details in mind.

To begin, you may be wondering where you should go to buy long-term care insurance. Long-term care policies can be purchased on an individual basis, and in some cases, through group plans offered by employers. Most policies pay a fixed dollar amount, usually $50 to $250 per day—for long-term care services.  Policyholders can choose the amount, the length of time benefits will be paid, and the deductible period. The cost of long-term care insurance partly depends on the age of purchase: it generally costs less at a younger age.  Typically, the premiums purchased before the age of 65 are much lower than policies purchased after the age of 65.

Find out first if your employer or retiree association offers a plan. If so, ask about the coverage and costs. Shop around for an individual policy and compare benefits and costs of different policies before you buy anything. Search for the best deals but also be realistic.  Select a provider that has at least 10 to 20 years of history dealing with this type of insurance. Make sure you check their company’s ratings by visiting www.moodys.com or www.standarandpoors.com. Typically you should try to select a company with one of the four highest ratings to be on the safe side. Additionally, according to Steve Vernon over at MoneyWatch, you should ask how many rate increases the insurance company has imposed on existing long-term care insurance policyholders for the past five or 10 years. Several recent rate increases can be a red flag.

You also want to make sure that the policy covers a large range of care options. This includes home health care, adult day care, assisted living facilities, residential care facilities for the elderly, and nursing homes. It is hard to know exactly what your long-term care needs will be, so make sure you will have as many care options as possible as you age. Lastly, be sure to read over your policy carefully before making any commitments. Know what you are signing up for and what benefits you have the right to with your long-term care insurance.

Thanks for taking the time to learn more about long-term care this National Retirement Planning Month! Remember don’t wait too long to put this information to good use. Insurance premiums increase substantially as you age and as your health declines in old age, so the sooner you purchase long-term care insurance the better.

If you would like more information on purchasing long-term care here are some additional resources:

• 10 Questions to Ask Before Purchasing Long-term Care Insurance
• Long-term Care: What Are Your Options?
• WISER’s NEW Long-Term Care Resource Guide

Now that you know why long-term care is important, as well as how to have a conversation with your loved ones about it, you may be wondering exactly how much long-term care actually costs.  Because long-term care encompasses such a broad array of services and supports, the costs can vary quite a bit.  To give you a better idea of these costs, in 2011, it cost:

• $43,472 annually for home health aide services
• $15,600 annually for adult day health care services
• $39,135 annually for assisted living facility services
• $70,445 annually for a semi-private room in a nursing home
• $77,745 annually for a private room in a nursing home

Depending on what state you live in, long-term care can cost significantly more or significantly less than these averages.  For example, let’s compare the annual cost of the same long-term care services listed above with California (a state with one of the highest cost of living in the U.S.), Tennessee (a state with one of the lowest cost of living in the U.S.) and Florida (the state with the highest number of seniors):

To look up the cost of long-term care in your state click here.

These services can clearly become pretty pricey overtime.  You may be wondering how in the world you’re going to be able to pay for long-term care.  You can pay for it out of pocket, but this is a very expensive option that many people cannot afford. Many may think that Medicare also covers these expenses; however Medicare actually covers very little when it comes to long-term care.  There’s also Medicaid, but you would have to first qualify for Medicaid by meeting the low-income requirement, which may cause you to spend down what assets you already have.

For many individuals, the best option for paying for long-term care is through long-term care insurance.  Long-term care insurance helps to pay for many of the costs of care or personal assistance associated with long-term care that people might otherwise have to pay for themselves.  In our next blog, we will continue our discussion on long-term care, specifically focusing on what factors to consider when buying long-term care insurance.