The GII for Investor Advice recently interviewed Ms. Hounsell on why women need to become more aware of retirement security issues.

Q: Are women at particular financial risk in retirement?

A: Yes, they are. That’s true of currently retired women, where one out of four single older women live in poverty — a record that puts us at the bottom of all the industrialized nations. And, despite the entry of women into the labor force in record numbers, it remains true for the future retirement of too many of today’s young and middle-aged women.

Q: What are the differences in men’s and women’s lives that make it more difficult for women to achieve retirement security?

A: Two of the most important differences are employment patterns and caregiving. Women are largely concentrated in low-wage, service, part-time, and small-firm jobs, where pensions are less likely to be offered. Three out of four working women earn less than $30,000 a year, and nine out of ten earn less than $40,000. Women also change jobs more frequently, which reduces their ability to qualify for a pension. In addition, the nation’s retirement system doesn’t account for the caregiving roles that women take on that eventually cause them to receive smaller benefits. According to data analyzed by the National Center on Women and Aging at Brandeis University, 40 percent of survey respondents reported that caregiving affected their ability to advance in the job.

Q: Are there common mistakes that women themselves make?

A: Yes, there are. Despite the tremendous strides toward equality that women have made — or sometimes because of it — women sometimes shortchange themselves economically. For example, in dating relationships, they may feel compelled to pay half of all expenses, even when they can’t really afford it. In more committed relationships, they may use their money to help meet the couple’s everyday expenses while their partner’s goes into investments, which grow and grow.

In marriage, they may fail to make sure they know where the family money is, what investments each spouse has, and what those investments are worth. While no one marries with the thought that the relationship won’t last a lifetime, statistics sadly prove otherwise. And even if your marriage does last throughout your life, it just makes good sense to be financially aware — you can be a more equal partner in financial decision making.

Q: What advice do you have for younger women to improve their chances of having a secure retirement?

A: The key for young women, as all the financial wizards tell us, is to start retirement planning early. Starting to save and invest early puts the power of compounding on your side: because your money earns a “salary” of its own over time, you can actually contribute fewer dollars yourself to reach your retirement goal. Using an on-line calculator available on the websites of many financial services firms can show you the dramatic difference that starting just one year earlier can make.

Young women should find out what types of retirement plans are available at their work and make sure they take full advantage of any employer matching funds — this “free money” is absolutely the best deal in saving for retirement. And, they should learn about mutual funds that offer individual retirement accounts with low administrative fees and about the opportunities for tax breaks. As their assets grow, they should strongly consider working with a professional financial advisor. An advisor can help ensure that a realistic plan to reach a secure retirement is in place, and that it is modified to reflect life changes along the way. In general, women do not seek out professional advice soon enough.

Q: WISER has several publications and website articles aimed at women going through divorce. What are the particular retirement-related considerations that women should be aware of during divorce?

A: It’s extremely important to pay attention to retirement benefits at divorce, which can be a couple’s largest asset to be divided. Such benefits can make an important contribution to a woman’s retirement security. Retirement benefits that may be treated as marital property include company pension and 401(k) plans, government retirement plans, military retirement, and Individual Retirement Accounts.

However, getting a portion of retirement benefits is not simply a matter of a wife applying for a share of her husband’s benefits. The divorce court needs to issue a special court order requiring the retirement plan in very specific terms to give her a portion of her husband’s benefits. A woman whose marriage is ending should make sure that her lawyer takes the time to find out all the information needed to prepare a pension order that will be acceptable to the pension plan and fully protect her interests — and that the final order is filed promptly after the divorce.

Q: We’re all aware that, on average, wives live longer than their husbands. What are the ramifications of widowhood for women’s retirement?

A: In a nutshell, they can be devastating. For many older women, the road to poverty begins after their husbands die. Expenses are likely to be 80 percent of what they were, but income may be only two-thirds of what it was prior to the spouse’s death. Pension benefits from the husband’s work generally are reduced by 50 percent, and Social Security benefits may be reduced by a third or more.

And not all widows are elderly — Katie Couric’s experience reminds us of this, although her loss doesn’t include the harsh financial realities that follow for the average American widow. A third of women who become widowed are younger than age 60; half of all women who will become widowed become so by age 65.

Q: Since women, on average, earn less than three-quarters as much as men, finding money in their budgets to save and invest can be difficult — especially as they begin their careers. Do you have any advice on improving women’s salary situation?

A: Yes, there are steps women can take to improve their skills and help ensure that they’re paid fairly. Ask your supervisor and your colleagues what kind of training and skills you would need to move into a better-paying job in your company — and then pursue them. Consult trade journals, want ads, or Department of Labor wage information to get a sense of the salary ranges for someone with your qualifications in a similar job. And network with people outside your company to learn about salaries for comparable positions, and to hear about other job opportunities.

Q: WISER has published a special report on proposed changes to the Social Security program in which you state that women should help make sure that any changes are carefully considered. Why?

A: There are several reasons that women have a particularly important stake in any major policy shifts in Social Security. As we’ve already discussed, women typically have a record of lower earnings because they leave and re-enter the workforce to care for their families, and because women earn, on average, lower salaries than men. The current Social Security program was designed to favor lower earners over higher earners in calculating benefits — lower earners have a higher proportion of their work salary replaced as benefits. This kind of protection would be lost in an individualized account system.

Women’s greater longevity is also an issue. You can’t outlive your Social Security benefits; under an individual account system, the size of your benefit depends on your investments. If your investments aren’t large enough at retirement, you could outlive them.

There’s an even more immediate concern, though: improving private pension coverage. Less than half the workforce have pensions. Congress and the media shouldn’t let the current focus on Social Security distract their attention from that.

Related posts:

1. Retirement: women are more serene, but less well prepared
2. Income limit for occupational retirement provision
3. Is it worth pre-retirement?
4. To achieve goal of a financially stable retirement
5. Poll on women’s entrepreneurship!
6. With Retirement Fund
7. Retirement For Independent
8. Retirement: the middle class will suffer a significant drop in income
9. Retirement Question: The mandate of planning will become an indispensable part
10. Retirement: When your portfolio starts paying you!