Why Many Retired Women Live in Poverty - And What You Can do to Prevent It

Retirement for women is different than for men, and unless this fact is recognised and acknowledged, a woman's retirement may become something less than golden. My intent in this article, is to discuss what we can, even must do, to assure our years in retirement are some of the best years of our lives. 

There are many reasons for us living in poverty during their 'Golden Years'. Below are some you may recognise, and suggestions and solutions you may wish to consider. 

Problem #1: Many women rely too heavily on our spouse 

For income during the working years, benefits during retirement, and for ongoing financial guidance and advice throughout the years, with unforeseen and tragic results in many cases. (3 of every 5 elderly women face retirement without a husband). 

Problem #2: Work Patterns 

We often have irregular work patterns, due to marriage, children, care giving and other responsibilities. This often leads to us not earning full retirement benefits, or any benefits at all. Even when we do earn and contribute to our retirement accounts, our benefits tend to be a fraction of what men receive because of our lower earnings and complicated schedules that penalise us for moving in and out of the workforce. For these reasons men's pensions tend to be upwards of two and a half times that of women. 

Problem #3: In all too many cases a divorce occurs, sometimes even later in life, and the financially inexperienced woman is set adrift in unknown waters. 

For wealthier couples, the assets are divided in what appears at first glance to be equal, but the woman's share may include the family home with a hefty mortgage payment, while the husband receives the cash equivalent to rebuild his life. In addition, the ex-husbands income is not disturbed, while the woman's income may be dependent on temporary alimony and/or child support. Whatever income we are able to generate by going back to work, often with little or no job skills and being out of the work force for many years, brings lower pay, therefore lower future retirement benefits. 

Problem #4: Widowhood upon the husbands death the retirement fund can cease or decrease (geography dependent), putting the widow in a financial bind. 

One-third of women who become widowed are younger than 60. Half of all women who become widowed are younger than 63. Widowhood can severely jeopardise a woman's economic prospects. 80% of women live longer than their spouses and often by many years. The risk here is if we try to maintain our current living standards, we may deplete our savings over time. As health expenses or long term care needs arise we may be forced to reduce her standard of living, or spend down assets in order to get assistance. Neither of those choices bode well for our quality of life. 

Solutions, Recommendations and Strategies 

First, educate yourself about the family finances. Make sure you have a good overview and understanding of what assets are owned, how they are titled, who the beneficiaries are, etc. 

Prepare yourself to manage your own finances, as the odds say you will need to do just that at some point. 

Make sure you are named on all family accounts as owner, co-owner, or beneficiary. This establishes your legal right to these assets should the marriage end in divorce, death, or even if your partner becomes incapacitated. 

Next, build what I call the Three-legged Stool of Lifetime Financial Security: 

1) Inflation protected lifetime income 

2) Growth/income investments for future needs 

3) Long term care protection in the form of assets or insurance, or some combination of both

Some of the solutions to ensure your lifetime security could consist of: 

• Your social security retirement benefit 
• A secondary inflation adjusted income you can't outlive 
• A prudently managed growth/income account to keep pace with the cost of living
• A creative and flexible method of protecting your potential long term care needs 

5) Time tested strategies of ensuring you pay no more than your fair share of taxes 

Article Source: https://EzineArticles.com/expert/Steve_Hood/81257