Women often lack glitter in their golden years

McClatchy Newspapers (MCT) - Catherine McCandlish plans to work the rest of her life.

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Why? Now 55, she's accumulated only about $15,000 in retirement savings.

"I've been playing grasshopper while the ants have been busy saving," she said. "Finally my consciousness is up, and I know I'll never be able to retire. What a noodlehead I was that I didn't even think about retirement security."

Hers is a concern for millions of American women whose hopes for the golden years are being tarnished by hard economic realities.

The odds for a comfortable retirement are not in women's favor. More women than men are outliving their savings. Women are twice as likely to die in poverty as men. And prospects are even worse if those women are divorced or a minority.

The reasons are clear: As a group, women work fewer years, earn less, save less, and then live longer than men. It's a potent recipe for financial insecurity.

"A lot of the women I see fear becoming bag ladies, whether they have money or not," said Sharon Lockhart, a financial planner in Johnson County, Mo.

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McCandlish earns about $40,000 a year as an admissions representative for Grantham University in Kansas City, Mo. She has a good credit rating, so she recently was able to get a loan to help pay some expenses. But now, her extra cash is going to pay interest.

"I'm a wonderful spender ... on what, I don't know," she said. "What does it say about me that I don't even know that?"

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McCandlish, who is working with a financial planner, finds herself in a predicament common among women who never took an interest in personal finance and now are approaching an uncertain retirement.

Hope for a leisurely retirement has faded for many men and women alike, but Bureau of Labor Statistics data show that the consequences are playing out in the workplace more forcefully among women.

Participation in the labor force by women 65 and older is increasing nearly twice as fast as that of older men, and the statistics bureau projects a 147 percent jump in the percentage of women 80 and older who will be working in 2016.

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Cloe Commans, 78, works full time and plans to keep at it as long as her health allows.

"I opted for the money side of retirement," said Commans, the manager of a condominium tower in Kansas City. "I want to leave my grandchildren something instead of draw down my portfolio."

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While some women are working late in life because they want to, others work because they have to.

Here's why:

_ Over their work lives, U.S. women on average work for pay 12 years less than men.

_ The median annual earnings of working women are about $10,000 less than men's earnings, partly because more women work part time and partly because there are more women in lower-paying jobs.

_ More than half of working women reported in a recent national survey that they can afford to save nothing for retirement.

_ A 65-year-old woman is likely to live about 20 more years, about three years longer than a man's life expectancy.

_ The median annual income for retired women is less than two-thirds that of retired men, partly because women have less income from pensions or retirement accounts.

Concern about personal finances in old age permeates the psyches of American women.

The Institute for Women's Policy Research this year analyzed an economic security survey commissioned by the Rockefeller Foundation. The report concluded:

"Despite their educational achievement and their (perhaps temporary) financial connection to a husband, women's lives are pervaded with a sense that economic catastrophe may be just around the corner.

"And a disproportionately large segment of the female population has already experienced this kind of catastrophe and knows full well how it feels to put off health care, be unable to provide adequately for their children, or go hungry."

How did it come to this?

Social Security, one prop on the "three-legged stool" that supports older-age income, is a gender-neutral program.

Women, per se, are not discriminated against by the program, which on average pays qualified retirees about 40 percent of their pre-retirement earnings each month.

But most financial planners say retirement income needs to equal at least 70 percent of pre-retirement income to avoid a big decline in standard of living.

Cindy Hounsell, executive director of the Women's Institute for a Secure Retirement, writes in "The Female Factor 2008" that "nearly half (46 percent) of all elderly women beneficiaries relied on Social Security for more than 90 percent of their income" in 2005.

Clearly, Social Security alone will not allow maintenance of a pre-retirement lifestyle for most workers. In June 2008, the average retired-worker benefit for men and women recipients was $1,084.50 a month.

"Based on 35 years of earnings, women in general are disadvantaged in the size of their Social Security checks because they tend to work in lower-paying jobs," said Dorothy Witherspoon, regional administrator of the U.S. Department of Labor's Women's Bureau in Kansas City.

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Retirement benefits are calculated based on the highest-earning 35 years of a person's work history, usually requiring at least 10 years of qualifying work history.

A worker in 2008 needs annual earnings of at least $4,200 to earn enough credits for the earnings to count in one's work history. Thus, some part-time work _ more likely done by women _ won't qualify.

Also, more women than men cycle in and out of the work force because of child-care or parent-care reasons, which can cut into the highest earning years.

As a result, the average woman's monthly Social Security retirement benefits check, as of December 2006, was $905 for women, compared with $1,178 for men.

Women are also far less likely than men to receive employer-sponsored pension benefits, which serve as the second leg of the retirement stool.

Less than one in three women receives pension payments in retirement, compared with one of every two men.

Women also are less likely to stay on a job long enough to be vested _ to have the right to receive any pension funds when they leave a job.

And, if they do participate in pension plans, the size of the average woman's pension fund is only about 60 percent of a man's.

According to the Institute for Women's Policy Research, among full-time workers, men and women are equally likely to have some kind of pension coverage _ about six in 10 participate in an employer's plan.

Even so, studies show that a woman's participation in a pension plan still may not produce retirement income.

When women change jobs and receive lump-sum distributions from their pension accounts, financial planner Barbara McMahon often counsels her clients to roll the money into a new retirement account.

"Women tend to spend instead of reinvest _ not on themselves, but on their children's weddings, their children's college tuition," McMahon said. "There are too many cases of women using their lump sums for current needs."

And looming over all discussions of retirement security is a major fact: Defined-benefit pension plans are vanishing in favor of defined-contribution plans.

Many plans require workers to contribute in order to qualify for "matching" contributions. If a woman needs all of her paycheck to meet living expenses or simply doesn't understand the enrollment process, she's less likely to save.

Fortunately, financial planners noted, automatic or "opt-out" enrollment in some defined-contribution plans is boosting the enrollment of some working women.

Personal savings, investment income and income from other sources, including working, serve as the third leg of retirement security.

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But financial planners say too many women aren't saving because living expenses eat up their incomes or it's not a priority.

Surveys find that women aren't as active as men in trying to build their investments or willing to take as much risk.

Those generalities are changing. More women are majoring in or working in the financial disciplines. More are heads of households and making their own decisions. More are joining investment clubs and seeking financial advice.

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So while many are taking control of their financial future, the question is: What can be done to head off the oncoming wave of economically strained older women?

Some women's advocates call for the rules to be changed to allow accumulation of Social Security credits for time spent caring for children or parents.

Even if those reforms don't occur, change is in the air.

For younger women, gender-based retirement security gaps are likely to shrink as more women work longer in higher-paying jobs.

At the same time, concern over Social Security or pensions being available in the future is causing Gen X and Gen Y women to pay more attention.

"Even in college, I knew I'd have to start up my 401(k) or 403(b) as soon as I started working," said Amy Mitchell, 32, of Overland Park, Kan.

The Employee Benefit Research Institute recently reported that 11 percent of Americans ages 19 to 39 ranked "retirement" as their biggest fear.

To that end, the Mitchells already have opened a savings account for their baby.

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© 2008, The Kansas City Star.