Only slightly more than a third of women know how much to expect in retirement income.
Though their first priority for retirement is to ensure financial security should they outlive their partners, women are not likely to plan for those events ÂÂâ 28% said they intend to rely on their spouseâs money for retirement income and 31% say they know how much they need to save to reach their retirement goals, according to Prudentialâs Financial Wellness Census. Another scary statistic: Less than half of women are confident theyâll have enough money to last through retirement.
Simply put, Americans ÂÂâ and women in particular ÂÂâ need to know how to estimate retirement income, just as much as they need to diligently save for retirement during their younger, working years. Women and men can plan accordingly for their futures, such as where theyâll live and how much essentials like health care and groceries will cost (or fun activities, like a month-long cruise), if they know how much money to expect every month in retirement.
Women need to prepare for that stage ÂÂâ some 80% of men die married but 80% of women die single, according to the Womenâs Institute for a Secure Retirement, which means theyâll have to manage their own finances. They are more likely to fall below the poverty line after age 75, (three times more likely than men), as theyâve traditionally been the ones to leave the workplace to care for children and ill family members, or earn less than men.
Retirement conversations usually center around how much more Americans need to save for their futures ÂÂâ which is understandable, considering how unprepared most Americans are ÂÂâ but having a clear picture of whatâs waiting when you get to retirement is just as important. âThe focus has been more on accumulating and getting to retirement,â said Kent Sluyter, president of Prudential Annuities. Knowing how much money will be there may be complex.
Why? Retirement income is usually not coming from one source, such as a 401(k) plan or individual retirement account, Sluyter said. Here are a few income streams, and where to go next:
Through the Social Security Administration, American workers can create a MySSA account, which lets them see if their work history is accurate and how much to expect in a retirement benefits in the future. The estimate is recorded monthly and starts at age 62 (the soonest youâre allowed to claim Social Security benefits), and extends to the individualâs full retirement age (depending on the year they were born), and age 70. The Social Security Administration also includes assumptions, such as how long youâll work, though it could change.
Social Security is a key component to understanding future monthly retirement income. If you donât know how much to expect from Social Security, you donât know how much you need to complement the benefit. âIf you know Social Security will replace 70% but you want to have 90% income replacement, then you need to calculate that,â said Cindy Rehmeier, executive board president of the National Association of Government Defined Contribution Administrations. There are numerous calculators available on the web to determine retirement income, assets and spending (including one on MarketWatch).
Spouses should discuss estate plans, such as who is named as a beneficiary or in a will and how much to expect. Sometimes beneficiaries are not aware they were named until the policyholder (such as in a life insurance case) dies, and may miss out on that income, according to Insurance.com. They may also be the beneficiaries of long-gone pensions, or accounts they never discussed with their partners.
Women need to participate in financial conversations with their spouses, though they donât always. A recent UBS report found 56% of married women leave investment decisions up to their husbands (61% of millennial women do so, specifically).
The problem: Women may not feel comfortable or heard in money conversations with their spouses and professionals, according to a 2009 Boston Consulting Group study, which found women feel theyâre spoken down to or ignored.
Individuals may want more than their own accounts and Social Security will offer. A few additional means of retirement income include immediate annuities, which convert a lump sum into a continuing income stream, or âladdered bonds or certificates of deposits,â which invest in bonds that mature at differing times, according to Investopedia.com. In the latter scenario, when one bond matures, another is purchased, which contributes to low risk and consistent returns.