Dave Carpenter

For women, achieving a comfortable retirement is much harder

By Dave Carpenter
Associated Press / May 7, 2011

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It took the collapse of her marriage to jolt Luanne Schmidt into action. After years of taking a hands-off approach toward money, the 50-year-old nurse from Lannon, Wis., only recently took charge of her finances. Her savings and retirement security, she knew, were at stake.

“Do I know enough about finances and the market yet? No,’’ says Schmidt, the mother of three children. “But I’m at least headed in the right direction.’’

Women’s prospects are improving as they gain economically and begin to close the gender gap. But Mother’s Day serves as an opportunity to consider all the moms and non-moms alike who are struggling in retirement or face heightened financial challenges because of their gender.

The fear of ending up poor or even running out of money in retirement still gnaws at many women in particular.

It’s hardly irrational. Women find it significantly harder than men to achieve a comfortable retirement. They live longer, earn less, and typically lag in savings and financial awareness.

“The fear is real,’’ says Cindy Hounsell, president of the Women’s Institute for a Secure Retirement, a nonprofit.

A new concern is the millions of baby boomer women who will be swelling the ranks of divorced, widowed, and never-married women living on their own in retirement. Single retirees are at greater risk of poverty.

Schmidt’s experience embodies some of the challenges. She gave up full-time work for 17 years to raise her children.

Her divorce last year meant she had to suddenly become her own money manager and make sure her retirement savings were invested properly while still putting the youngest two kids through college. It’s been a scramble, and an education.

“It can be a scary situation for women who didn’t work full time for years and don’t have pensions,’’ she says.

Schmidt sees women who have outlived their resources every day at the nursing home where she works. So she hired a financial adviser who helped calculate how much she needs to save in order to retire at 65.

The statistics are sobering:

■ Women still outlive men by an average of five to seven years. At 65, a woman typically has another 20 years of life expectancy, according to the Centers for Disease Control and Prevention.

■ Women make about 77 percent of what men make, based on Census Bureau data for 2009. Three of 5 working women earn less than $30,000 a year, AARP says.

■ The average woman spends about 12 years out of the workforce, according to the Social Security Administration — generally for family purposes.

Some more hopeful signs are emerging. The female-to-male earnings ratio is trending upward gradually. Women also are attending and graduating from college at a higher rate than men, which bodes well for future earnings.

Dave Carpenter writes for the Associated Press.