Women and Retirement: What You Need to Know Now!

The strain of recent financial hard times has touched us all. But there's another serious wake-up call for midlife women. Since women, on average, live five years longer than men and, given the fact that at age 65 our income is half that of a man's, there's urgency to develop a personal, long-term money plan. We must factor in this longer life expectancy and carefully plan the rate at which we spend our savings.

If we're being sober about this – and we should be - women must therefore anticipate and prepare for several retirement scenarios:

• Being alone
• Being with the man/partner in our lives
• Losing our spouse/partner, post-retirement

These are each very different circumstances and require very different strategies on how to use retirement savings. Women must be committed to believing we deserve economic security. In order to attain it, regardless the circumstance in which we find ourselves in midlife, we cannot allow ourselves to become a victim of money paralysis.

THE NUMBERS DON'T LIE

90% of women will live alone by choice or circumstance at some point in their lives. Nearly a third will be poor or near poor. Widowed and divorced women are three to four times more likely to be poor than women in couples. For many older women, Social Security is their only source of retirement income.

We work hard but we make less. The Institute for Women's Policy Research says Asian American women (due to historically higher rates of educational attainment) make on average, 87 cents for every dollar men earn. According to the National Women's Law Center full-time white working women earn, 77 cents; African American women, 61 cents; and Latinas, 52 cents. Because women are still discriminated against when it comes to wages, staying educated about how to maintain and improve our own personal financial wellbeing is critical.

Regardless of our race, in addition to lower earnings and the fact that many of us work part time or for an employer offering few or no benefits, women have additional unique money concerns as we grow older:

• Different work patterns. Due to pregnancy and family care-giving responsibilities, we work 13 years less than men and have lower lifetime earnings for Social Security income.
• We spend more on out-of-pocket health care expenses. Women have more chronic illnesses at midlife, and our illnesses frequently result in the need for long-term care (and other medical services often not covered by many insurances or Medicare).

The good news is – we can address the issue because women are exceptional money managers and investors when we put our minds to it!

In general we operate with a goal-oriented approach when it comes to money. We make a plan and we work to achieve it. We place a high premium on trust, and because we tend to be relationship-oriented, much like being willing to ask for driving directions when lost, we are motivated to find good, reliable experts when in doubt or unsure regarding financial decisions.

Women deserve economic security. The necessary common denominator we must have — or acquire — to achieve it is self-reliance. Self-reliance will prevent or at least mitigate becoming a victim when confronted with one of those midlife "now-I'm-alone" money scenarios.

7 MUST-DOs TO SECURE YOUR FINANCIAL FUTURE

So, starting today:

1. Calculate what represents 80% of your pre-retirement income (which is what most experts say you'll need in retirement)
2. Spend wisely and save wildly
3. Shrink spending and debt
4. Count on your benefits by increasing your contributions to retirement savings plans
5. Think long-term and get long-term care insurance
6. Regularly review and check your progress toward your retirement savings goal
7. And don't forget to play "catch up" if you can. For midlife women who are age 50 and older, we're eligible to make an additional contribution of up to $5,500 pre-tax dollars to our 401(k) plan in addition to our standard contribution.

Valerie Coleman Morris is the author of "Mind Over Money Matters: It's Your Money So Take It Personally", which will be published later this year.