Elder Law FAX -- September 11, 2006

10 Ways for Baby Boomer Women to Avoid Poverty in Retirement
Many elderly people -- and not so elderly people -- fear becoming poor during their retirement. As the first of the baby boomer generation -- those born in 1946 and later -- attain age 60 and, at the start of the next decade, full retirement age, for many boomers, the prospect of retirement and its attendant financial uncertainties is uncomfortably close.

Most male workers who retire at age 65 today can expect 15 years of life remaining. Women are likely to live longer. If they are married at retirement, the odds are that they will survive their husbands by several years.

What can women who are approaching retirement age do today to help them avoid poverty during their retirement years?

The following checklist was prepared by the Women's Institute for a Secure Retirement, which draws upon a report sponsored by the Society of Actuaries Committee on Post-Retirement Needs and Risks from LIMRA International, the Society of Actuaries and Matthew Greenwald & Associates.

1. Save More.
Most people don't think about tomorrow or underestimate the amount of money they will need to have for their retirement.

2. Assume that you will live longer than you expect.
Although it is not a guarantee, longevity does seem to run in families. Remember that if you plan your retirement savings to live to the "average" life expectancy, half of these folks live longer than the average. Women in particular risk outliving their savings.

3. Educate yourself on sources of retirement income.
For most people, Social Security will be their primary source of income, and they overestimate how much income they will receive during their retirement and underestimate its importance to their well-being.

4. Learn how to manage your retirement savings plan.
Due to the growth of retirement savings plans such as 401(k) and 403(b) plans, workers are now responsible for managing their investments. Most workers lack basic financial knowledge but need to become experts about work benefits.

5. Look for good advice.
A significant portion of retirees and pre-retirees do not seek the help of a "qualified professional." Yet, while they indicate a strong desire to work with a professional, most ask friends and family for advice.

6. Don't count on working.
Plan early! Many workers will retire before they expect to, and before they are ready. Nearly four in ten people retire due to poor health, caring for a family member, or job loss.

7. Deal with inflation.
Inflation is a fact of life that workers usually deal with through pay increases. After retirement, it is up to people to manage their own assets, or secure guaranteed income. Few people have the skills to manage income to keep up with inflation.

8. Face facts about long-term care.
Many people underestimate their chances of needing long-term care. Relatively few people either own long-term care insurance or can afford to self-insure a long-term care situation.

9. Provide for a surviving spouse.
Many married couples fail to plan for the eventual death of one spouse before the other and the resulting drop in income at the time of widowhood. Many more single women live in poverty in old age.

10.Make your money last for a lifetime.
People often pass up opportunities to get a lifetime pension or annuity, failing to recognize the difficulty of making money last for a lifetime. People say guaranteed lifetime income is important, but in practice they usually choose a lump sum.

© 2006, Women's Institute for a Secure Retirement

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