Don’t Be a Statistic; Start Planning Your Financial Future!

The Census Bureau’s newly released numbers highlight the challenges that almost all Americans are facing when trying to reach a financially stable retirement, and this challenge is even greater for women. A few findings from the report are as follows:

• The wage gap between men and women grew between 2007 and 2008. Median earnings for women in 2008 were just $35,745, while median earnings for men totaled $46,367. Women are earning only 77 percent of what men earn, down from 78 percent in 2007.

• The poverty rate increased this year also: the 2008 poverty rate was 13.2 percent, up from 12.5 percent in 2007. This is the first significant increase in the poverty rate since 2004.

• The income deficit, the difference between a family’s income and the poverty line, for families in poverty increased between 2007 and 2008. This income deficit was largest for families with female headed households ($9,638). (Income, Poverty, and Health Insurance Coverage in the United States: 2008)

Women clearly have many obstacles to overcome when planning for a secure retirement. According to a WISER Special Report, The Pay Gap is Connected to the Retirement Gap, almost half of all women work in lower-paying jobs that do not offer retirement plans or 401(k)s.

In addition, women take, on average, 12 years off of work to provide caregiving. While women are busy taking care of family members, they lose years of income to add to their Social Security benefits and retirement plans.

What Can you Do About it?

While these statistics may seem daunting, there are lots of things women can do to start taking control of their financial futures, and the best time to start is now!

Want an easy way to get on the right track? Check out WISER’s website to learn about saving and investing strategies. Educating yourself is a crucial step in planning your secure retirement!

Savvy Saving for Young Women

With the economy currently in recession and unemployment on the rise, it is vital for young people, especially young women, to start saving early. Job security is never a guarantee, so ladies, it's a good idea to become savvy with your spending and saving early.

Whether you're still in college or fresh into a job, it's essential to put some money aside each month. Investing in a mutual fund or U.S. Savings bond is a good idea, and the sooner you start the better, so the interest can compound for more years. Consider setting up and automatic withdrawal of $50 a month or more from your paycheck or checking account into your savings.

If you're still in college, collegescholarships.org offers several good tips on how to live on a budget while saving for the future.

After graduation and newly employed means a steady paycheck, but don't let this be a reason to spend more. Check out nextstudent.com to learn how to live on a budget, happily, while saving for the future.

Beth Kobliner's newly revised and updated Get a Financial Life examines personal finances in your twenties and thirties. Kobliner also discusses ways to get out of debt, save for your first home, and how to invest wisely with little money. Check out this review by USA Today.

Whether you're young and employed or still getting an education, don't put off saving. Start today.

5 Questions to Ask Your Mother or Grandmother

May is Older Americans Month, and for many of us, the most important older Americans are our own parents and grandparents. Although thinking about retirement is difficult for everyone in these tough financial times, it is particularly important for women, who too often live out their retirement years in precarious financial straits.

This month, take time to help yourself - and those you love - plan for a more secure retirement. Start by asking your mother or grandmother the following questions, following up with suggestions found in the complete version. Together you may find some solutions that will make both of your lives better.

5 Questions to Ask Your Mother or Grandmother

1. Can you make ends meet; are you worried about depleting all of your savings?

2. Do you have a competent tax and financial advisor?

3. Are you struggling with prescription drug costs?

4. Are you getting all the medical care you need?

5. Have you been approached to get involved in charitable contributions, investment schemes, business ventures or loans that seem questionable?

To read the entire fact sheet, visit The National Education and Resource Center on Women and Retirement Planning at wiserwomen.org.

Happy Older Americans Month!

Retirement Insecurity, a new report by The New Hampshire Women’s Policy Institute and underwritten by WISER, examines the financial status of New Hampshire’s older women and recommends state-level policy changes that could increase savings for current and future generations. The report provides the first-ever in-depth analysis of the financial status of New Hampshire’s women aged 65 and older. Among the paper’s major findings are: 

·         Women’s lower income during retirement years is driven by a disparity in lifetime earnings between women and men due to differences in pay rates, labor force participation in full-time and part-time work, as well as women’s primary role as caregivers in society. The estimated lifetime cost of caregiving is $659,139. 

·         New Hampshire women 65 and over who live alone have the lowest incomes among the state’s older population and are at the greatest risk of not being able to pay housing or health care costs. Sixty-two percent of older women living alone have incomes below what is needed to cover basic costs of living. 

·         The Institute estimates an older women living alone needs approximately $20,000 per year to cover the basic costs of living, just over twice the federal poverty level. Approximately 28,000 women 65 and over in New Hampshire had household incomes below that level in 2007. 

·         The lack of financial security is a major driver for public benefit programs as New Hampshire residents age. Is estimated that Medicaid spending on women aged 65 and over in 2020 is expected to cost New Hampshire taxpayers $330 million.

·         There are a range of policies and activities which can be implemented now, many with minimal immediate cost that will help to ensure that the women of New Hampshire are able to live out their lives in the homes of their choosing and as a continued social, economic and political force in their communities.

 For more information, go to http://www.nhwpi.org/, or download the Retirement Insecurity Fact Sheet. To access the 30-page report pdf, click here. 

Blog About It: Elder Economic Security

Today marks the start of Older Americans Month. WISER is partnering with Wider Opportunities for Women on its National Elder Economic Security Initiative: What does elder economic security mean to you? We encourage you to answer this question by leaving a comment on WISER's blog, or on the National Elder Economic Security Blog. 

Old Age Is No Place for Sissies

Life Expectancy

While a long life can be a wonderful gift, a long life in poverty or near poverty is not so wonderful. Today, an average woman’s life expectancy at birth is 80.4 years, compared to 75.2 years for an average man. If a woman lives to age 65, she can expect to live until age 85 ― about three years longer than a 65-year-old man. 

Marital Status

Many widows face poverty for the first time in their lives. Between the ages 75–84, only 34 percent of women are married with their spouse present. For women aged 85 and older, only 13 percent are married with their spouse present. In contrast, 70 percent of men aged 75–84 and 56 percent aged 85 and older are married with a spouse present.

With the death of a spouse, women often experience a steep drop in income. When a woman becomes a widow, she stands to lose a significant amount of income from her spouse’s pension and even from Social Security.

Poverty

The poverty rate for all women age 65 and older is 12 percent. Single women in this age group are at a much higher risk of poverty. Over 20 percent of single white women are living in poverty; the rate is double for single African American and Hispanic women. 

Portion of Single Older Women Who Are Poor and Near Poor
	Below 100% of Poverty (Threshold $9,669)	Below 150% of Poverty (Threshold $14,504)	Below 200% of Poverty (Threshold $19,338)
Age
65+	19.1	45.9	61.5
65-74	18.4	38.6	53.4
75+	19.5	47.1	66.5
Note: The poverty thresholds shown in this table are for 2007,  calculated in 2008.  Source: CPS, Table POV 01, 2008.

Retirement Income

The median annual income for women age 65 and older is not quite two-thirds of what men the same age are receiving ($14,021 compared to $22,323). Social Security is intended to replace approximately 40 percent of an average earner’s wages, but many women rely on it as their primary or only source of retirement income. This is one of the major reasons why so many women are poor or near poor.

In theory, women should be saving more money than men because they live longer and will need money to support themselves and pay for the rising cost of health care and prescription drugs.  Yet in reality, they are not able to save the vast amounts that are needed due to diverse work patterns and caregiving responsibilities that require them to move in and out of the paid labor force or to work at part-time jobs where they are less likely to have retirement plans or savings.

As a result, millions of women are vulnerable to outliving their assets and facing the real possibility of poverty.

We can hope that public policymakers will adopt changes to prevent poverty in old age, such as providing caregiver credits, improving the Saver's Tax Credit, developing a better system of financing and providing long-term care. However, women must learn to make the most of the existing system and make the best financial decisions toward securing their futures. 

So, what does Elder Economic Security mean to you? 

Why does she earn less?

Yesterday, Tuesday, April 28 was Equal Pay Day. 

Today, 56 percent of working women earn less than $30,000 a year and only 7 percent earn more than $75,000; in contrast, 39 percent of men earn less than $30,000 and 18 percent earn more than $75,000. Women, on average, are paid 78 cents for every dollar a man makes.  For those ages 65 and older, the income gap between women and men is even larger—older men’s median annual income was almost twice that of older women ($23,500 and $13,603 respectively).   

So, why does she earn less? 

Part of the wage gap between the sexes is the result of differences in education, experience, or time spent out of the paid workforce; but a significant portion of the gap cannot be explained by any of these factors, and may simply be the result of wage discrimination. Working women pay a steep price for unequal pay. The typical working woman with a college degree will make about $500,000 less in wages over her lifetime than an equivalent male—an amount that could provide a comfortable retirement nest egg.

Take Action

From The National Committee on Pay Equity—Urge your senators to support the Paycheck Fairness Act:

The House passed the Paycheck Fairness Act to strengthen enforcement of the Equal Pay Act on January 9, 2009. Please urge your senators to support S.182. The Paycheck Fairness Act would ensure effective remedies for wage discrimination and make it easier to sue on behalf of groups of women. Read NCPE's Feb. 23, 2009 letter to senators urging quick action on the Paycheck Fairness Act (S.182). 

(http://www.pay-equity.org/PDFs/Letter-to-Senate-PFA2-23-09.pdf)

For more on the gender wage gap, go to http://www.pay-equity.org/. 

WISERWoman & Long-Term Care

What comes to mind when someone uses the term "long-term care"? Do you picture a nursing home or a hospital? Long-term care includes a broad range of health and support services that people need as they age or if they are disabled, including personal care and assistance with daily tasks such as eating, dressing and bathing. The latest issue of WISERWoman highlights long-term care, examines its costs and explores long-term care insurance as an option. For women, who are more likely to live alone in old age, it is crucial to begin asking the tough questions related to long-term care: Who will provide care? How will I pay for it? Should I buy LTC insurance?

Read it here.