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Better retirement planning essential for women, report finds

Saturday, January 8, 2011  
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Self-management of retirement risks is becoming increasingly critical for women, according to "The Impact of Retirement Risk on Women,” a report released in December 2010 by the Society of Actuaries.

The study, based on a 2009 survey of 804 adults aged 45 to 80, found the length of women’s planning horizon is relatively short compared to life expectancy. While men and women have similar planning horizons -- approximately 10 years for pre-retirees, five years for retirees -- women have significantly longer life expectancies. Although half of women will live beyond age 85, only 11 percent of female pre-retirees and 8 percent of female retirees have that long a planning horizon.

Married women also are ill-prepared for widowhood, the report concluded. While the age difference between women and their generally older husbands has declined somewhat over the last several generations, a majority of women can expect to spend an extended period of time in widowhood.

How retired women approach their golden years differs from the way retired men or pre-retired women do. The survey found retired women are more likely than men to worry about paying for adequate health care and long-term care, depleting their savings and having the financial wherewithal to remain in their homes. Among pre-retirees, women are more likely than men to worry only about not being able to afford long-term care.

Still, in many ways, women and men manage risk similarly, eliminating consumer debt, saving as much as possible and investing in stocks or mutual funds, the study found. However, women are more likely to cut back on spending to protect themselves financially. Just four in 10 men said this would be a strategy, while 64 percent of women said they would cut spending.

While women and men expect they will need similar services, women are more likely to rely on family or community services for assistance. Female pre-retirees are more likely to rely on family or community services (69 percent) than are male pre-retirees (48 percent). Similarly, retired women (70 percent) are more likely to rely on family or community services for help than retired men (56 percent). Retired women are more likely to expect to pay for assistance (46 percent) than are retired men (34 percent).

In another gender difference, women are more likely to expect their retirement expenses to increase as they become more limited in their capacity to perform activities of daily living. Female pre-retirees are more likely to think they will need more money (50 percent) than their male counterparts (34 percent). Among those who expect to spend time in a very limited-activity stage of retire­ment, retired women are more likely to expect they will need more money (68 per­cent) than retired men (43 percent).

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