Within this issue is the alarming reality that women, on average, are saving less than men for a retirement that will start sooner and last longer. While the automatic enrollment features of the Pension Protection Act, may work towards bridging this gap, unchecked, this crisis will disproportionately affect the women of America.

Despite the political incorrectness of the recommendation, it seems that one of the best things women can do to ensure a comfortable retirement is marry. Eighteen percent of single women over 65 fell below the poverty line in 2000 (U.S. Social Security Administration, 2002). Another 10% were in the “near poor” category. According to the National Center for Women and Retirement Research, over 58% of female baby boomers –those born between 1946 and 1964 (the oldest of whom are 61 and could retire in four years) have less than $10,000 saved for retirement.

These numbers are shocking, but they don’t paint the whole picture. Though there are twice as many single, never-married women in the boomer generation as in previous generations, many female boomers may have a spouse with significant retirement savings. But even this type of arrangement should be managed carefully, as annuities, pensions, and social security benefits can be cut drastically upon the death of a spouse, leaving the wife with a much lower standard of living than she planned on.

With factors like less time in the workplace and lower pay working against women, it is little wonder that their retirement funds are not as healthy as they should be, whether they are married or not.

Despite their seeming lack of action, women are aware of the crisis they are facing, at least on an individual level. In a Spectrem January 2005 survey, when women retirement plan participant’s answered the question, “I fully expect to have sufficient income to live comfortably in my retirement” a robust 60% of respondents agreed with the statement. However, that number has steadily dropped from 55% in June of 2006, to 42% in January of this year, bottoming out at 33% in June 2007.

Mirroring that sentiment, in January of 2006 only 32% of women Spectrem Group surveyed agreed with the statement, “At the present time, my household is not saving enough to meet our financial goals”, as opposed to only 29% of men who agreed. That number has steadily risen in a year and a half, with 44% of women agreeing with that statement, in June of 2007.

Women need to be saving as much as reasonable possible from their income, as early as possible. They should to plan for a long life and, if married, they ought to plan for at least 6 years alone, without spousal support if they are the same age as their spouse and more if they are younger. Married women must not feel exempt from this crisis, despite the feeling of security a spouse’s retirement plan may give them. Couples need plan for every eventuality, especially the unpleasant ones: divorce, death, or a main bread-winner becoming incapacitated in some way, and unable to work and save. Retirement income vehicles like annuities and laddered portfolios should be set up to accommodate these eventualities and education needs to be in place to enlighten plan participants. The ugly truth is that a comfortable retirement doesn’t happen by chance or accident. A comfortable retirement requires planning and action.

Having a conversation with your female participants about the fact that they will most likely outlive their spouse, or if they are single, that they are at high risk for late life poverty is not an easy discussion to have, but unfortunately playing off women’s anxiety about their future may be the best way to get them to act. Making them see the possible reality of their lives as elderly single women once their money runs out is both important to this strategy and a completely possible future reality for them. For advisors there exists an opportunity to help a portion of the population that will suffer without your advice and counsel, and to capture a larger percentage of the assets they have to offer.

 Plan providers, sponsors and advisors need to step up their work with female plan participants, who need to be educated, informed, encouraged, and when all else fails, frightened into developing and executing a plan that realistically meets their retirement needs and addresses where they are in life, now. It’s easy for women to get distracted from the goal of a comfortable retirement. There are children and grandchildren to take care of, aging parents to tend to, bills to pay, and a plethora of other concerns pressing on them and their pocketbooks.

Women are not waiting for a knight wearing a suit of dollars to ride in and save them, or banking on a lottery windfall; they will be very happy to save themselves, and execute reasoned retirement plans. They simply may not know where to start, without education and guidance.

Setting goals and making a plan that takes into account all of the roles that women play and all of the factors they have working against them, as well as the ones they have working for them, will help your clients avoid the looming retirement crisis that could envelope them if they do not act to help themselves. Providing careful advice and guidance to help women participants reach their goals is the duty of the retirement industry.

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