Many women tend to neglect their financial and retirement planning. By ignoring their financial and investment education today, they seriously jeopardize their financial security later in life, particularly in old age when they won't be working. To ensure this education is not ignored, all of us should do more to encourage the women in our lives to seek the financial and investment knowledge they need to achieve and maintain their financial security throughout life.

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By David Braze (TMF Pixy)
November 13, 2000

For the last few days I have been reading Older Americans 2000: Key Indicators of Well-Being, a recently issued publication from the Federal Interagency Forum on Aging-Related Statistics. While this missive definitely is not as exciting as a Tom Clancy novel, I find the data rather interesting. Besides, it helps cure my insomnia, which has been somewhat bothersome of late. In any event, according to this report:

• Women make up 58% of the population age 65 and older and 70% of the population age 85 and older.
  
  
• In 1998, 79% of men ages 65 to 74 were married, compared with 55% of women in the same age group. Among persons age 85 or older, about 50% of men were married, compared with only 13% of women.
  
  
• In 1998, older women were as likely to live with a spouse as they were to live alone, about 41% each. Approximately 17% of older women lived with other relatives and 2% lived with nonrelatives.
  
  
• Poverty rates are higher among older women (13%) than among older men (7%).

Sure, sure, I know. You're probably thinking, "So, what does that prove, Fool? We already know that women tend to outlive men. Thus, it's no surprise there are more of them at an older age, or that most are unmarried. After all, the men died off, the jerks. And it's not surprising more women than men live in poverty at an older age, either. Men made more money than women, as a rule, so they don't run out of their savings as fast in retirement."

Well, maybe those reactions are correct, but then again, maybe they're not. Let's couple the findings cited above with some claims made by the Women's Institute for a Secure Retirement (WISER). WISER says the top five reasons retirement is a challenge for women are:

1. Three out of four working women earn less than $30,000 per year.
   
   
2. Nine out of 10 working women earn less than $40,000.
   
   
3. Half of all women work in traditionally female, relatively low-paid jobs without pensions.
   
   
4. Women retirees receive only half the average pension benefits that men receive.
   
   
5. Women's earnings average $0.74 for every $1 earned by men -- a lifetime loss of more than $250,000.

The assertions regarding pensions came from Women and Retirement Security, a sobering 1998 report published by the National Economic Council Interagency Working Group on Social Security. The pertinent statistics on earnings are readily available at the U.S. Census Bureau and in the Annual Demographic Survey conducted by the Bureaus of Labor Statistics and the Census.

1999 earnings data reflect that two of three women earn less than $30,000 per year compared to slightly less than one of two men. Eight of 10 women earned less than $40,000 in 1999 compared to six out of 10 men. While these numbers might be a little better than those quoted by WISER, they still should give rise to some concern when coupled with the statistics quoted earlier.

If that's not enough to worry you, then consider the National Endowment for Financial Education (NEFE) white paper on the Women & Money Program Incubator conference held jointly by the NEFE and AARP earlier this year. Quoting directly from that report, we see:

• A 1997 study by Dreyfus and the National Center for Women and Retirement Research found that 33% of women investors avoided making decisions out of fear of making a mistake, versus 22% of the men investors. As a consequence of this fear, women often defer financial decisions and money management to the men in their lives.
  
  
• A study by the National Center for Women and Retirement Research at Southampton College of Long Island University found that 58% of baby boomer women had saved less than $10,000 in a pension or 401(k) plan, while Baby Boomer men had saved three times that. A Scudder Kemper Investment, Inc., survey of households with incomes of at least $30,000 found that 43% of the men had more than $100,000 in their 401(k) plans, while only 27% of the women had that much.
  
  
• The 1999 Women's Retirement Confidence Survey found that just as many women as men are saving for retirement (around 70%), though far fewer women actually have estimated how much income they will need once they retire. Furthermore, women say they are less confident than men about their financial preparation for retirement, and they admit they are more conservative than men in their investments for retirement. Only 27% of the women versus 42% of the men in the confidence survey said they were willing to take substantial financial risks for substantial gain.

You want a really big scare? Read the entire white paper. If that doesn't convince you women have a problem planning for their financial future, then nothing will. That problem was amply pointed out last May when Anne Letterese penned a guest column in this space entitled Women and Retirement Wake-up Call. Her piece cited some of the above statistics, plus many others. All pointed to the conclusion that women, in general, need to do far more toward planning their financial well-being than they seem to be doing at present.

Yes, all of these data bother me. I hope they bother you, too. Unfortunately, I have no solution to this conundrum other than to ensure the women in my life don't ignore or postpone their financial education. Odds are they will be single and alone at some point. Obviously, the older they are, the more those odds will increase. Will they be financially healthy when that happens? Will they remain financially healthy? I don't know, but at least I can encourage them today to seek the financial and investment knowledge they need to maintain that status as long as possible.

I urge you to do the same for the women in your life.

See you next week. Comments? Post them in the Retired Fools board as usual.

Best to all...Pixy