Personal Finance

Whether married or single, this is how women are financially vulnerable in retirement

Key Points
  • Women today face unique circumstances when it comes to saving enough money for their later years.
  • Regardless of marital status, all women face the prospect that they will run out of money.
  • One cohort that's surprisingly at risk: women in married households where both spouses work.
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This isn't your mother's or grandmother's retirement.

If you're a woman in your 50s, the chances are greater than ever that you're not married, either because you're divorced or because you've never walked down the aisle, according to a recent study from the Center for Retirement Research at Boston College.

The research took a look at how prepared 50-something women were for retirement, based on the National Retirement Risk Index. That measures how well individuals will be able to replace their preretirement income.

Regardless of your marital status — married, single or divorced — there are certain financial vulnerabilities to watch out for in retirement planning, the research found.

If you're married

Much of your retirement risk if you're married is determined by whether you're in a single-earner or two-earner household.

Surprisingly, households where both partners work are more financially vulnerable when it comes to retirement preparedness. In the study, two-earner households were defined as those where both individuals have work histories of at least 10 years.

These couples are at risk because often just one person has access to an employer retirement plan.

And that spouse often fails to put away enough money to cover two retirements — as opposed to just one.

Two-earner couples also tend to have what's known as a lower income-replacement rate through Social Security benefits based on their earnings records.

"In terms of the ratio of contributions to benefits, you're significantly less well off than a single-earner couple," said Alicia Munnell, director of the Center for Retirement Research.

When both spouses work, the spousal benefits they could receive from Social Security gradually declines or even goes away altogether. Spousal benefits provide a nonworking spouse with 50% of a working spouse's benefit.

Single-earner couples, who are more likely to qualify for spousal benefits, tend to have a higher Social Security income replacement rate.

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If you're single

The wealth gap between single households and married households is large, the center found.

Yet, surprisingly, single women are less vulnerable than their married counterparts when it comes to retirement preparedness, according to the National Retirement Risk Index.

One reason for that: Social Security has a progressive formula. That means that lower earners get a higher benefit based on their earnings.

But single individuals may not always have access to a workplace retirement savings plan, which can set them back when it comes to accumulating their own savings.

If you're divorced

Even if you've divorced and remarried, you probably have not fully recovered financially from that previous breakup. And that means your retirement is more likely at risk.

The study found that almost a third of the women in the study had been divorced.

Having been married more than once significantly boosted retirement risk, compared with women who have been married only once or who are single, according to the National Retirement Risk Index.

More from Personal Finance:
Money stress traps many women in unhappy marriages
Women more likely to leave financial planning to spouses
The stakes are higher for women when claiming Social Security

Ways to manage risk

Regardless of your situation, it never hurts to ramp up your retirement savings.

That goes particularly for those in two-earner households who are more susceptible to neglecting those goals.

"Since two-earner couples … lose some of the benefits from Social Security, they really need to make sure that they're saving enough to replace both people's earnings," said Munnell.

Even if you do not have access to a retirement savings plan at work, you can still open up your own individual retirement account through which you can set aside funds.

Certain states, such as California and Oregon, are now requiring employers to either offer their own workplace retirement plan or a state-sponsored IRA.

"If your employer automatically puts some of your pay into an IRA each month, before you even get a hold of it, there's a chance that that will stay there and accumulate," Munnell said.