Annual Survey Reveals Disturbing Facts about Retirement Planning for Women

Disturbing report concludes that most women are not financially prepared for retirement.

The 25th annual Retirement Confidence Survey (RCS) concludes that most women are not prepared for retirement. Only 11% (1 in 10) unmarried women are very confident about having enough money to live stress free throughout their retirement years. More importantly, they are doing nothing about about it.

The survey found that unmarried women is the group that is worst prepared financially for retirement. Other groups fare slightly better but the disturbing fact is that majority of all groups are under-prepared.

Undoubtedly retirement saving has become tougher.

Companies have dumped their liability for providing retirement income onto their employees. However many women are unaware of what this means and what they have to do to provide for themselves.

In the “old days” private companies provided defined benefit pensions whereby the company looked after you in your retirement. These schemes are now dying a rapid death. The number of members in the US has nearly halved from 27.2 million in 1975 to 15.7 million in 2012. During the same time, the number of members in private defined contribution plans (you sort out your own pension) increased by nearly 7 times from 11.2 million to 75.4 million (U.S. Department of Labor: 2014).

Around the world defined contribution plans are now the major source of retirement income for private-sector workers. To support these investors there is renewed interest in providing them with estimates on what they should be saving and what amounts they should have saved by what age.

Helping them to find out whether they are “on-track” for an affordable retirement. Suggesting options like, the need to increase their contributions, delay their expected retirement age, modify their expected retirement living standards, or accept a lower probability of a “successful” retirement.

The Employee Benefit Research Institute (EBRI) and others have published several studies dealing with this topic. Their statistical model is used for both pre-retirement and post-retirement analysis. It calculates the percentage of the group that is estimated to have enough money in retirement. Achieving a so-called “successful” retirement.

For example in the study they consider a female aged 40, earning an annual salary of $40 000 and just starting to save. To have only a 50 percent probability of not running short of money in retirement she would have to save about 9.5 percent of her income. And even if the contribution rate was increased to 19.5 percent, the probability of success would only be 75 percent.

Many women are concerned about having enough money to take care of medical expenses during retirement. In addition many don’t believe that they will have enough money if they need it to pay for long-term care. But, full of wishful thinking, they believe that social security and medical assistance will go on at the same levels that exist today.

In the 2015 Retirement Confidence Survey there are some other disturbing conclusions regarding a “successful” retirement. Only 22% of all workers believe that they will have enough money to live a comfortable, stress free retirement. However only 16% have prepared a formal, written financial plan.

Despite being unprepared people still believe that they will retire at 65. So there is obviously a gaping gulf between expectations and reality.

With the odds stacked against them and widespread apathy most women are not giving themselves a chance for a financially successful retirement.

Release ID: 86543