AMJ Financial Blog

Shattering the “Glass Ceiling” of Retirement

We have all heard of the “glass ceiling,” and in recent decades, society as a whole has worked toward shattering it.  Though many will argue that the ceiling is still intact, there is no question that women continue to approach it, and many have been able to break through.  Despite the focus on that effort, women are finding themselves with a new problem on their hands once they find their financial success: how to prolong that success into their retirement.

Studies upon studies upon studies have proven that women lag behind men in their retirement planning.  It’s easy to point fingers at various causes of this.  Some say that it’s because the male dominance in the financial industry causes women to shy away.   Others say that women lose their financial momentum when they take time away from their careers to raise a family.  Still others blame the mother’s instinct to put their family before themselves as the cause, pushing their own financial future toward the back burner.  The truth probably lies somewhere in a combination of them all.

While the causes for the lack of financial planning in women are still in the air, the effects are pretty obvious.  Women are living longer than men, but are saving less.  A recent report from the ING Retirement Research Institute found that women who are 50 to 69 have about 20% less in retirement savings than men in that age group.  This increase in life expectancy and lack of savings has left 9% of all women over the age of 65 living in poverty.  It’s a growing problem that needs to be addressed early and often if women are to shift the trend.  There are a few things that women can do now, in their working years, to prepare for their upcoming retirement.

Take advantage of your benefits – All women, whether they are married, single, or divorced, should take advantage of the benefits available to them through their employers.  Despite the fact that more and more women are becoming either the sole or leading breadwinner in the family, many of them are not focusing on the financial benefits that come with their careers.  It’s important that women are getting the full benefit of employer retirement programs, such as 401(k) matches, and invest all that they can.  In many households where both the man and woman are working, the woman’s income is often used for more discretionary purposes while the income from the man is used for their investments.  In the long run, women need to make sure that they are making the most of their money and their future.

Increase Survivor Benefits – With the life expectancy of women continuing to rise past that of men, it’s important that women make note of the survivor benefits they will receive if their spouse is to pass away.  The most obvious of these situations is in defined-benefit pensions and Social Security payments.  In defined-benefit pensions, it can be tempting to take the single life offer that brings higher payments, but to help protect the future of the surviving spouse it’s worth considering the joint survivor benefit that allows for partial payments to continue after the death of the retiree.  Also, applying for Social Security early will leave the surviving spouse with much lower payments later, so it’s important to delay application for Social Security benefits for as long as possible to ensure the largest payments later.

Learn About Your Finances Now, Not Later – 61% of men say they are most responsible for retirement and financial planning decisions in the household, while only 34% of women claim that responsibility.  It’s important for women to understand these decisions and learn the lessons of their financial planning now, so they can make more informed decisions later.  Because of increases in divorce, women remaining single and life expectancy, the majority of females will, at some point, find themselves on their own, which means they need to be able to make critical decisions about their financial future for themselves.  Whether this means seeking out a financial professional for advice, or making smart decisions on their own, it’s critical that women learn the ins and outs of their financial portfolio now, or they will suffer the consequences later.

Women are continuing to make strides in terms of their professional and financial independence, and it’s important that as they reach those goals, they understand what to do when they get there.  By planning for their future, taking advantage of the opportunities around them, and taking the time to educate themselves, women can continue to make strides in their retirement as well.

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