Cathie Ramey
RedwoodAge.com

They spend less time in the workforce, get paid less on the job, and live longer - often as a widow. It's no wonder that women face a high risk of poverty in retirement.

Two groups are pointing to these issues in separate efforts to help women save for retirement. The Women's Institute for a Secure Retirement (WISER) called for support of legislation to give tax breaks to people on annuities, and a Wachovia Corp. study found women need to increase their knowledge about how to save for retirement.

WISER noted that women still earn only 77 cents for each dollar a man is paid, leaving them with retirement income that is about 58 percent that of men. Because of a bigger role in family caregiving, women work about 12 years less than the average man, which cuts their participation in employer-sponsored retirement plans.

Women are far more likely to live alone in old age, raising their living costs. One in five unmarried elderly women is poor, according to WISER. Overall, one in 10 female retirees lives on less than $10,000 a year. That leaves them below the federal poverty line, which many critics note is far below the true minimal costs of living.

"With more years out of the workforce to care for family, combined with lower wages and greater life expectancy, its clear that simply being a woman in our society may jeopardize your financial security," said WISER president Cindy Hounsell, author of the report.

Wachovia, in its fourth annual retirement study, found women are downright scared by retirement planning. More than half of the pre-retirement women in the study said they're "frightened" by the idea of entrusting their savings to the stock market. This is almost double the number of men - nearly 30 percent - who feel the same way.

"Women need to become more comfortable and confident with retirement saving and the basics of the market so they can create a nest egg that will last," said Lynne Ford, director of Wachovia's retirement group.

What may be fueling this insecurity is the belief by 47 percent of the women that investing "takes more knowledge and skill" than they have, compared to 30 percent of  men who feel the same way.

Limited Access
Another reason for the lack of confidence may be related to exposure and experience. Nearly one out of every three working women surveyed said they don't have access to a 401k plan through work and of those who do, only a quarter contribute the maximum dollar amount allowed. 

By comparison, four out of five working men say they have access to a 401k at work and one-third contribute the maximum.

The data follows another recent survey that showed women are very concerned about rising taxes, increasing healthcare costs and paying for health services in retirement.

A lack of financial literacy may also be holding women back. When unfamiliar terms and phrases saturate financial information and conversations, who's ready to admit they don't know a stock from a bond? A recent AARP Financial study found the inability to understand how their retirement plan works is the reason one out of every six Americans fails to participate.

Gender Differences
The Wachovia study found that having money and planning for retirement affects men and women differently. For those men and women who described their retirement as going "somewhat" to "much better than expected," 65 percent of the men said they had "more money than they expected" while only 55 percent of women said the same.  

These higher levels of satisfaction  for men may be the result of something as simple as planning. More than half the men said they "planned effectively before retirement for their finances" compared to less than half the women surveyed.

It's important for women to become as comfortable as men when navigating the maze of financial planning and the study brings to light ways in which women may want to learn from the opposite sex.

"The study shows us that more men attribute their satisfaction in retirement to having more money than do women, and more men say they planned effectively in the pre-retirement years than do women, " Ford said. "We'd like to see an increase in women citing planning as an ingredient for satisfaction in retirement because having a plan will help people achieve a greater sense of stability."

WISER is supporting federal legislation that would exclude 50 percent of the income from a lifetime annuity from taxes, with a maximum of $20,000 per year. Bills heading through the House and Senate have bipartisan support.

"With more than one out of every 10 women retirees living in poverty, it is important for the federal government to help women save for retirement," said Sen. Gordon Smith (R-Oregon), one of the sponsors. "As this report demonstrates, simply being a woman can put people at greater financial risk in their golden years."