Women Face High Risk of Outliving Their Money

08/15/2009 05:12 am ET | Updated May 25, 2011

Here's some bad news for men: We don't live as long as women. But there's bad news for women, too: you might live too long--financially speaking.

Women face a greater longevity risk--the danger of outliving their assets and experiencing poverty in old age. The average life expectancy for a 65-year-old American woman is 20 years, or 85 years of age--three years more than a man. And those figures are just averages, which means many women will live well beyond 85.

But longevity isn't the only factor at work here. Our retirement benefits system is tied closely to the amounts we earn during our working lives--and here, men continue to be far ahead. The non-profit Women's Institute for a Secure Retirement (WISER) offers the following statistics:

  • Women work at paid jobs an average of 12 years less than men do over their lifetimes due to family care giving responsibilities. Fewer work years translates to fewer years saving or participating in an employment-based retirement program. It also means lower Social Security benefits.

  • Women earn 78 cents for every dollar earned by men.
  • Less than one-third of retired women today receive pension income. And less than half of today's working women have access to a pension or retirement savings plan through their jobs.
  • As a result, nearly 40 percent of older women living alone depend on Social Security for almost all of their income and more than half would be living in poverty were it not for their Social Security benefits. In 2007, 20.5 percent of unmarried women age 65 and older had income below 100 percent of the federal government's definition of poverty-far higher than rates experienced by men or married couples, according to Census Bureau data.

    WISER's director, Cindy Hounsell, has been working for more than 10 years to draw attention to the general problem of retirement security for women. Recently, she has been trying to turn up the volume on one particular question: how to get more guaranteed income for women in retirement.

    "The discussion usually focuses on the accumulation of retirement assets," she says. "Retirement experts tell us to save enough to pay our costs over our life expectancy--but we don't need life expectancy income. We need lifetime income."

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