Retirement outlook is more challenging for women

Try this experiment at your next neighborhood barbecue. Bring up the topic of the retirement savings crisis and you are likely to be met with can-we-change-the-subject eye rolls. But mention gender pay disparity and watch the fireworks.

These topics are linked like two pieces in a Rubik's Cube of forces that, according to the most recent retirement confidence survey from the nonpartisan Employee Benefit Research Institute (EBRI), leave women less confident than men that they will have enough saved for retirement — and with good reason.

Women made up 68 percent of the 4.2 million elderly poor in 2013, according to U.S. Census Bureau estimates, with 11.5 percent of women and 6.8 percent of men age 65 and older living below the poverty level. EBRI projected that retirement savings shortfalls for those on the verge of retirement vary from $19,304 (per individual) for married households, increasing to $33,778 for single males and $62,734 for single females.

This gap prompted former Wall Street executive Sallie Krawcheck to label the retirement savings crisis as a crisis for women. Krawcheck, who had been one of the most senior women on Wall Street as a head of Merrill Lynch Wealth Management, now leads Elevate Network, a professional women's association.

In addition to gender pay disparity, which contributes to lower lifetime earnings and lower retirement savings, Krawcheck and others have cited women's greater life expectancy, higher health care costs and the large number of either widowed or divorced women living alone in old age as factors contributing to what some have termed the "feminization of poverty" in old age.

Another piece of the Rubik's Cube reveals itself even when couples diligently save for retirement. Couples whose retirement savings are mostly in defined contribution (DC) type plans (e.g., a 401k or IRA) instead of defined benefit (DB) pension plans, face another potential challenge. They can get caught in a no-win situation if one spouse seeks Medicaid coverage for long-term care before tapping the DC plan. Currently in Minnesota under that scenario, the couple would have to spend down that nest egg, leaving the healthy spouse (often the woman) with depleted retirement savings.

"Women face some unique challenges" in preparing for a financially secure retirement, observed Mary Jo George, AARP's associate state director for advocacy. Women are more likely than men to take time off work to provide unpaid care to an aging parent or relative, a move that can impact the caregiver's own financial retirement readiness. A MetLife study cited by AARP found that women 50 and older who leave the workforce entirely to care for an aging parent lose, on average, nearly $324,044 in wages, Social Security and pension benefits compared to men who lose an estimated $283,716.

While there are no quick fixes, Krawcheck has called on employers and policymakers to address the gender pay gap and support more family-friendly policies such as longer company-paid parental leave and day care. AARP argues that offering elder care as an employee benefit will help address the caregiver dilemma.

Over the past few years, three states have implemented state-administered retirement savings plans, similar to 529 college savings plans, for workers whose employers do not offer any retirement plans. Minnesota, along with more than a dozen other states, is conducting a feasibility study with results expected this fall.

Personal financial challenges motivated two financial advisers at Thrivent, Shirley Bachman and co-worker Merry-Ellen Bryers, to help other women "take control of their personal finances." Bachman, a widow, and Bryers, a single mother, formed an online meetup group earlier this year, Girls Just Want to Have Fund$. Since it launched, the group has grown to 500 members. With support from their employer, the women conduct meetings several times a month, inviting speakers on various financial topics from estate planning and retirement to investing and insurance.

Bachman said that most of the group's members, like the population at large, don't have a good idea of how to go about planning for retirement. Her advice is for women (and men) to find a financial planner they trust and put a plan together that will provide a financial road map for retirement. And she says that her younger meetup group members, even in their mid-20s, are not too young to start thinking about retirement. She compares financial planning to a fitness plan.

"You can choose to maintain a healthy lifestyle today or wait until your health risks are high because of your lifestyle. You can wait until the last minute, or plan ahead."

Brad Allen is a freelance journalist and former investor relations executive for companies including Imation Corp. and Cray Research.