The research backs up our intuitions. The Social Security Administration’s Office of Retirement Policy reports that single, retirement-aged women are poorer than married women. Of those never-married women, 26.1% are poor.
For divorced women retirees, the poverty rate is 18.4%, and for widows it is 16.3%. For married women 65 and older the corresponding poverty rate is 4.9%.
Clearly, marriage goes hand in hand with greater economic security for retired women. Furthermore, having been married at some point in the past is financially better than never having been married. Much of the marriage benefit may come from Social Security spousal and survivor benefits and laws requiring that spouses be named beneficiaries on certain types of retirement plans, unless they proactively waive this right.
Our major purpose in showcasing this data is to turn it into actionable advice for women in their retirement years. However, this does not mean advising women to marry “up” in terms of wealth and “down” in terms of years. Nor do we automatically urge single retiree women to find a roommate or move to cooperative housing as a way of reducing their costs of living.
We believe that you have to tread very carefully with this kind of counsel. Many women, we included, are fierce about their independence in later life. We believe this feistiness can contribute to their ability to financially survive in retirement.
But the one piece of advice we have no hesitation in offering to pre-retiree women is this:
Be aware that your retirement, or a significant portion thereof, may look nothing like ours or his. He may see retirement as a time of leisure, travel, with wife at his side, living in the same fashion and location that they have for years. This is certainly the way the ads for financial services portray it.
By contrast, a single woman’s life often takes a hard turn into a very different scenario. Her life expectancy may take her to the end zones of the age distribution, where household wealth diminishes most rapidly.
Secondly, make sure, particularly if you are now part of a couple, that your retirement planning addresses both the “his” and “her” sides of retirement. Too often couples—even those with financial advisors—stop short, focusing only on the joint retirement vision, without adequately projecting the reality of what may await women in the later phases of their lives. Simply deciding that life insurance may be called for—the amount based on a rule of thumb that she will need 50% of what the couple lived on—doesn’t cut it. A bottom-up, rather than a top-down, analysis of cash flow is needed to ensure that the contingencies of a single lifestyle are planned for.
Women themselves must take responsibility for looking squarely at what may be in store for their later years. We have worked with women who assumed, but did not verify, that they would be OK in retirement, only to find that an insurance policy was canceled, a beneficiary designation was changed, or there was more debt than they realized.
Nowadays we all want our reality to be “virtual,” projected with the added clarity of another dimension so that whatever we are imaging seems immediate, tangible and real. What we argue here, and in our forthcoming book on women in retirement, is that we need to bring more virtual immediacy to the area of retirement planning. We need the gender dimension to bring into focus what our elder years will actually be like. And then, of course, to prepare accordingly, with eyes wide open.
Eleanor Blayney, MBA, CFP is a retired financial planner, business owner, author and CFP Board consumer advocate. Marjorie Fox, J.D., CFP is a founder and retired CEO of FJY Financial LLC. Together they are writing a book for women in their 60s and 70s, which will be published in 2020.