Retirement may be dicey for single women

All the Single Ladies, All the Single Ladies: Start planning now for your financial future!

A much-anticipated report released Tuesday shows the roughly 55 million single women in the U.S. are in a far more precarious position than married women – as well as all men – when it comes to retirement savings. As a result, they may face serious financial hardship as they age.

About 40 percent of unmarried women have saved less than $1,000, according to the 2016 Retirement Confidence Survey by the Employee Benefits Research Institute and Greenwald and Associates. That's significantly higher than the 34 percent of unmarried men, 22 percent of married women, and 12 percent of married men with a similar, meager amount in savings and investments.

Single women "lack the financial security of a dual-earner household to support their retirement savings, along with the added income associated with dual Social Security and a spouse's retirement benefits," said Kim Mustin, co-head of global distribution at BNY Mellon Investment Management.

"They might also be carrying housing costs with a rental or home mortgage. If they are single mothers, they might have the sole financial responsibility of the cost of raising children," she said.

Studies have shown women generally don't think they will need as much money as men, despite the fact that women tend to live longer and face higher expenses in retirement.

About 36 percent of unmarried women and 29 percent of married women think they'll need to accumulate less than $250,000 for retirement, according to the EBRI survey. Meanwhile, the majority of men believe they should have saved $500,000 or more.

"Women may not fully comprehend the long-term costs of inflation affecting necessities like food, housing, health care and transportation," Mustin said. "Many of us live in the moment and don't think about what tomorrow will bring and the implications an unexpected illness or injury can have on a person's savings."

Unequal treatment in employment also puts women at a disadvantage, as they are more likely than men to work part-time and interrupt their careers to take care of family members. Lower earnings also impact women's ability to maximize employer-sponsored and other retirement savings plans.

Across all age groups, women have substantially less income in retirement than men, according to another report from the National Institute on Retirement Security. For women age 65 and older, their income is generally 25 percent lower than that of men. As men and women age, the gap widens to 44 percent by age 80.

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As a result, the study found that women are 80 percent more likely than men to be impoverished at age 65 or older. Additionally, women age 75 to 79 are three times more likely to fall below the poverty level than men in the same age group.

Why the disparity? The gap may stem in part from the fact that women live longer on average than men, said Diane Oakley, executive director of the National Institute. In the United States, a woman turning 65 today can expect to live to more than 86. For men, it's 84.

Women generally still earn less than men during their working years and that could affect their financial situation down the road, said Andrew Simonelli, director of communications and marketing at the Insured Retirement Institute.

"If your employer is making retirement contributions based on your salary you're going to have less, and your Social Security is going to be less," he said. "Those 79 cents on the dollar (that women generally earn compared to men) are going to have a lot of impact on financial security."

A lack of financial planning is also setting women back.

Unmarried women (and men) are less likely than married couples to estimate how much monthly retirement income they should have, calculate how much they'll need for health care expenses, work with a financial advisor or prepare a financial plan, according to the EBRI report.

Women and men may say they put a high priority on saving to ensure they live comfortably in retirement, yet only 55 percent of women are actually saving for their later years, compared to 65 percent of men, according to a BlackRock survey.

There is one bright spot: Women are more likely than men to participate in their workplace savings plan. "After years of having less access to retirement plans, women have caught up," Oakley said. "Women who are saving, might be saving more – but there are still a lot of women who have nothing saved," said Oakley.

The average 401(k) account balance for women is about $75,000 versus about $123,000 for men. Meanwhile, the median for female workers of all ages was about $24,400 in 2014, compared to almost $37,000 for men, according to a Vanguard report.

"That's just not really going to be able to provide them with an income that would make up what we see in older households today," Oakley said.

Another effort to help women in retirement is the recently proposed Women's Pension Protection Act. Among its provisions is a requirement for spousal consent before a married worker can withdraw money from a retirement account, in certain situtations. Currently, this protection is only available to those in defined benefit plans such as traditional pensions.

Oakley said increasing participation rates for both men and women in 401(k) plans – currently hovering at 46 percent nationally will improve the financial situation of everyone.

Whether they are investing on their own or through an employer's plan, Mustin said both government and the private sector need to be doing more to help all women prepare for their financial future.

"It all starts with encouraging women to develop a financial plan, whether that is with a financial advisor, robo-advisor, bank or their employer…so that women understand where they are going, what they are doing and what to invest in," Mustin said. "Knowledge turns worry into confidence. Women can then be empowered to take control of their financial planning outcomes."