Generation X Women Face Retirement Shortfall

Generation X Women Face Uphill Retirement Issues.

Women born between 1961 and 1981, give or take a couple years - are coined the Gen-X. So are men. That would make them approximately 37 to 57 years of age today. Single women face the hardest uphill climb to a secure retirement, according to a published article in Barron's Financial Magazine on March 4th.

Among the bullet points addressed ...
Women have:
* Smaller retirement savings balances due to time off for child-rearing.
* A wage disparity vs. men.
* Little or no spousal benefits vs. married couple's resources and pension / social security benefits.

Here is the text of that story following by Reshma Kapadia. I hope you find it helpful.
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For anyone who has ever spent a frustrating few hours clothes shopping knows that one size does not fit all. When it comes to retirement, many women, in particular - need a custom fit.


                                    

For single women, the situation often is even worse. Their retirement savings tend to be lower than their married—and even widowed—peers. While widows can face a sharp decline in income when a spouse dies, they often inherit their partner’s assets and spousal benefits from Social Security—a source of funds unavailable to single women. Plus, single women face unique challenges related to higher costs for retirement living and long-term care.

“I hear from a lot of women who say all the retirement advice is about couples,” says Cindy Hounsell, president of the Washington, D.C.–based nonprofit Women’s Institute for a Secure Retirement. “You really need to look for a different plan if you are single, and nobody else is going to help you, so you need more saved.”

A recent report by the Employee Benefit Research Institute, a nonpartisan think tank, looked at retirement security for Gen Xers—the population cohort born roughly from 1961 to 1981. The study found that only in one group of Gen Xers—single women—were half the people at risk of not having enough money to cover basic retirement expenses. The average expected shortfall also is greater for single women, at $73,000, or twice the estimated average shortfall for single men and more than triple that for widows. The gap persists even in the highest income quartiles, where 13% of single women are at risk of having a shortfall of $100,000 or more. That compares with just 7% of single men and 4% of widows.

Singles' ShortfallGen-X women who are single at 65 face the biggest expected shortfall in coveringbasic retirement expenses.

Americans are staying single longer, and marriage rates are declining, which means that more women could face this scenario in the future. About 57% of millennials (the median age for this generation is now 28.5 years) have never been married, according to a recent survey by the Pew Research Center. When today’s older retirees—the silent generation—were the age of today’s millennials, only 17% had never been married.

             Graph Removed Due to Technical Glitch

While a recent Society of Actuaries report found that fewer singles than couples put a high priority on retirement savings, financial advisors stress the importance of single women starting to think about retirement even earlier than other people. Their focus should be not only on saving more than their married peers, but also thinking differently about insurance, retirement housing, caregiving plans, and estate planning.

Take the accumulation stage. Lacking a partner to fall back on if they get ill or lose their jobs, single women should build a more robust cash reserve for emergencies, and also consider buying disability insurance, at least until they have built enough wealth to draw on in an emergency, says Marguerita Cheng, a financial planner and head of Blue Ocean Global Wealth.

Because the risk of running out of money is greater for single than married women, some advisors favor a more conservative approach to financial planning. They assume lower expected returns on an investment portfolio to account for possible market volatility and higher costs in retirement.

And, while women tend to provide much of the caregiving to others, they often end up without any such help themselves. It’s one reason why the majority of nursing-home residents are women.

Some people can pay out of pocket for long-term care, but many advisors recommend that single women analyze whether buying some level of insurance to help with such aid is warranted.

“What we tend to see is that the first phase of long-term care tends to come from family members. For those who don’t have children or family near, you have to be more careful about costs because the clock on costs starts on day one,” says Laly Kassa, a certified financial planner at Chevy Chase Trust, which oversees $27 billion in assets.

She advises single clients to prepare to spend 70% of what a couple would spend in retirement, not 50%, to account for higher costs.

Another key consideration is the likelihood of companionship in retirement. A 2017 report by the Society of Actuaries, based on surveys of people 85 and over, found about two-thirds living alone, with women more likely to be in that situation than men. One key reason:

Only 15% of the women were still married at 85, versus 55% of men.

Living at home brings many potential challenges, and is one reason advisors recommend that single women consider continuing-care retirement communities earlier than married couples usually do. These offer a spectrum of care from independent living to skilled nursing care, under one roof.

Moving into such facilities earlier usually enables residents, whether single or married, to create a community and safety net while they’re still healthy.

Single women also can look into shared housing options, or buying homes together, to reduce costs and also create a care-giving safety net, says Catherine Collinson, chief executive of the nonprofit Transamerica Center for Retirement Studies.Co-housing communities focused on seniors recently were spotlighted in a National Building Museum exhibit in Washington D.C.

And then there’s the paperwork: Estate planning is important for everyone, but it’s especially crucial for single women to make sure that documents such as a will, a waiver that allows health information to be disclosed to a third party, and powers of attorney are in place. For those who struggle with finding a proxy, financial institutions can be hired to take on the task and act as a co-trustee.

Also important is checking the beneficiaries on accounts. For example, some pensions don’t allow for nonspousal beneficiaries—one reason that single pension holders who want that money to go to a child or someone else might want to roll the pension into an individual retirement account, for which they can name a trust as a beneficiary, Cheng says.